‘Bitter’ sugar war rages on as new 30-year lease deals are signed

The leasing of four sugar companies in Western Kenya to private entities has raised a storm even as the government gave assurances to stakeholders including farmers and workers.

The government through the Ministry of Agriculture and Livestock Development has brokered a 30-year lease for Nzoia, Chemelil, Sony and Muhoroni sugar factories.

The leasing of all the four State-owned sugar mills took place on May 10th, 2025 after handover ceremonies were conducted.

Following signing of the lease pact, West Kenya Sugar Company, manufacturers of Kabras sugar brand which is owned by Jaswat Sigh Rai who is also the Chairman of Rai Group of Companies, takes over Nzoia Sugar Company.

Kibos Sugar and Allied Industries Limited officially assumed operations at Chemelil Sugar Company after the conclusion of the leasing process.

Muhoroni was taken over by West Valley Sugar Company under the chairmanship of Alfred Soi while Sony was leased to Busia Sugar Company owned by Ali Ahmed Taib, its founder and managing director.

However, the move has taken a political angle with area MPs questioning its credibility and distancing themselves from the deals.

The ministry says it entered into an agreement with sugarcane farmers and sugar factory workers’ unions through Kenya Union of Sugar Plantation and Allied Workers (KUSPAW), to pay cane delivery and salary arrears owed to both farmers and workers.

In a statement, the agreement explained that this was aimed at securing the future of cane farmers and sugar factory workers as the government leases out the four sugar companies to private millers.

Under the agreement, the government will settle arrears owed to both farmers and workers before the handover of the four factories to private millers.

Interestingly, the ministry did not mention the total amount payable for the 30 years the factories will be leased out.

The statement expounds that last year, the government paid out over Ksh 1.7 billion to sugarcane farmers to clear arrears owed by sugar factories.

“Since then, the factories have accrued Ksh 500 million for cane delivered by farmers. Under the agreement, the government will pay farmers the Ksh 500 million debt in July this year,” reads the statement.

Again last year, the government paid over Ksh 600 million to factory workers out of the Ksh 5.3 billion owed to workers leaving Sh 4.7 billion in arrears.

However, the arrears owed to factory workers have since accrued to an estimated Ksh 5.6 billion.

It is worth noting that last year the government wrote off over Ksh 117 billion to bail out the local sugar industry and injected an additional Ksh 2.5 billion to clear arrears owed to farmers and workers.

“Following lengthy negotiations, the government has entered into an agreement with the Kenya Union of Sugar Plantation and Allied Workers to safeguard the interests of sugar factory workers,” stated the Ministry.

The Union has signed a Memorandum of Understanding (MoU) under which the government (as the Lessor) undertakes that there will be a 12-month transition period during which the four lessees shall evaluate their workforce needs and determine the criteria for the retention of current employees.

The Ministry, led by Cabinet Secretary Mutahi Kagwe, shall remain responsible for all unpaid salary arrears, pension contributions, and statutory deductions up to the lease handover date.

A phased payment schedule shall be adopted which will include payment of Sh 1 billion to workers upon takeover (600 million to pay part of the staff arrears and the remaining 400 million to pay salary as from the month of May 2025).

Another Sh 1.5 billion will be released in July, 2025 to be used for the payment of staff salaries and arrears.

From there, the government shall continue to pay salary arrears at the rate of Ksh 1.17 billion (to be verified) on a quarterly basis until 30th June 2026.

“The decision to lease out the four sugar factories was arrived at after lengthy consultations with key stakeholders across the sugar sector including farmers, sugar factory workers, unions, Members of Parliament, Governors and approvals by the Cabinet,” reads the statement by the Ministry.

It further explains that the decision was informed by the need to ensure a return on investment for taxpayers, who have, over the years, bailed out the ailing sugar sector.

However, the lease has led to a rise in political temperatures with legislators from the region questioning its credibility and casting doubts over the plight of employees.

For instance, MPs Majimbo Kalasinga (Kabuchai) and Jack Wa (Bumula) asked President William Ruto to revoke the Nzoia Company lease to Rai Group.

Kalasinga said they were unhappy with how the government handled the take over of Nzoia Sugar Company, maintaining it was against the wishes of local leaders and the community.

“Nzoia Company was established to create employment for local youths, to avoid flooding other far away towns in search of jobs,” said the lawmaker.

Similar sentiments were expressed by MPs from Nyanza, among them Ruth Odinga, Woman Rep representing Kisumu County where Muhoroni Sugar Company is based, who questioned its transparency.

She said workers’ representatives and the local leadership was not involved in any discussions prior to the signing of the lease agreement.

“There was no transparency, there was no discussion with the leadership. We have no idea and yet we are the ones representing the people on the ground,” said Ms Odinga, who is also a sister to ODM leader Raila Odinga.