State's Sh62b debt waiver on sugar good for industry revival
By The Standard | July 3rd 2020
The decision to waive Sh62 billion that cane farmers owe the government is welcome news after years of anguish. The sugar industry has been on its knees and operating at barely half capacity for decades.
In some areas, disillusioned cane farmers had uprooted the crop, opting for maize farming for subsistence. This was necessitated by the fact that sugar cane, a major cash crop, has not been giving returns despite heavy investment.
At some point, there was grumbling that while the government wrote off the debt owed by coffee and cotton farmers in other regions, cane farmers in Western Kenya had been neglected.
All that will now be in the past as the sugar industry gets a new lease of life.
The waiver will benefit farmers in the Chemelil, Miwani, Muhoroni, Nzoia and South Nyanza sugar belts. Up to the time of waiver, they had amassed a debt of Sh60 billion in loans on which interest accrued is Sh2 billion.
By whatever measure, this indicates a fresh start in which farmers are not weighed down by loans they are unable to repay. Indeed, many of the factories had long shut down. The waiver sets the ball rolling for the leasing of the factories, which it is hoped, will benefit the farmers than add to their woes. The government will invite private firms interested in leasing and running the five state-owned factories to bid next week.
Mumias Sugar Company (MSC), the largest miller in Kenya is not a beneficiary of the write off even as it reels under a huge debt. Plans to revive the sugar miller, despite the injection of Sh3 billion through an IPO in 2015, have not borne fruit, yet it owes farmers a lot of money. The government should give MSC relief on what it owes to enable it to turn its fortunes and those of cane farmers, around.
The suspension of the importation of brown sugar is also welcome. The importation has greatly undermined local factories’ capacity to expand.
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Cartels have capitalised on the chaotic nature of the industry, loose laws and lack of stringent controls to import sugar to the detriment of local farmers. In large measure, importation of sugar has contributed to the slow death of our sugar industry.
With our sugar industries operating at full capacity, Kenya will take care of its sugar needs, with little call for importation.
For this reason, the government should invest more in the sugar sector. The latest move should be for the benefit of the cane farmer. That is as it should be.
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