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The government has completed the leasing process for four state-owned sugar mills to private operators, aiming to rejuvenate the struggling sugar sector.
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According to the Ministry of Agriculture and Livestock Development, formal agreements have been signed with sugarcane growers and workers’ unions to address outstanding dues prior to the transition.
The mills involved—Nzoia, Chemelil, Sony, and Muhoroni—have been leased for a 30-year term to West Kenya Sugar Company, Kibos Sugar & Allied Industries, Busia Sugar Industry, and West Valley Sugar Company, respectively.
As part of the deal, the government committed to settling Sh500 million owed to farmers for cane supplied since 2024, with payments scheduled for July 2025. This follows a Sh1.7 billion payout made to farmers in 2024.
For employees, Sh600 million was paid last year out of a Sh5.3 billion debt, which has since grown to Sh5.6 billion. Under an MoU with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW), Sh1 billion will be paid upon the May 2025 lease transfer, with an additional Sh1.5 billion set aside for salaries in July 2025.
A one-year transition phase will enable the new lessees to assess staffing needs, while the government will remain liable for all outstanding wage arrears, pension obligations, and statutory deductions up to the handover date.
The leasing strategy, which supersedes a 2015 privatization plan, was shaped through consultations with MPs, governors, and farmers, and was approved by both the Cabinet and Parliament.
In 2023, Parliament ratified the leasing model following extensive public engagement, and legal objections were dismissed by the High Court, which ruled that the Public Private Partnership Act—not the Privatization Act—governs the process.
The Ministry clarified that all land and assets will stay under public ownership, with leases renewed annually at market value. Lease proceeds will be channeled through the Kenya Sugar Board for local development and cane farming initiatives.
“These agreements reflect the best possible outcome for revitalizing the sugar industry,” said Agriculture and Livestock Development Cabinet Secretary Sen. Mutahi Kagwe, calling on all stakeholders to support the reforms.
