Kenya risks missing Comesa deadline for sugar sector reforms

By BD

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Kenya is likely to miss the Common Market for Eastern and Southern Africa (Comesa) deadline for liberalising the sugar industry due to wrangles between governors and the Privatisation Commission over sale of mills.

The Council of Governors (CoG) has rejected the sale in its entirety, saying it will not solve problems facing farmers, instead demanding the assets revert to the counties.

Previously, the governors were only opposed to the sale formula saying it was not in the interest of the growers.

Chair of the agriculture committee at the CoG Okoth Obado says counties are able to run the mills efficiently on behalf of farmers.

“We are not allowing the sale of these factories, we want them to be given to counties, which can operate them efficiently,” he said.

In March, the Commission said it was targeting to complete the sale to private millers by August before the safeguards come to an end.

Kenya was given up to February next year to privatise State-owned millers, among other requirements, before the safeguards that have been in place for over one-and-a-half decade are lifted. This implies that Kenya’s sugar will have to compete with cheaper commodity from Comesa states.

“Privatisation is not the solution to problems facing sugar millers; Mumias was privatised many years ago but look at the problems that it is facing,” said the Migori governor.

The government plans to sell a 51 per cent stake in the companies to strategic investors and reserve another 24 per cent for farmers and employees.

It will then sell the remaining 25 per cent in the milling companies through an initial public offering once the factories are profitable.

Farmers and political leaders in Sony, Nzoia and Chemelil have also opposed the sale of factories.

This implies that the commission will in the meantime only be able to sell highly indebted factories that are not active in production such as Miwani (owes creditors $276.6 million) and Muhoroni ($266.7 million), which are in receivership.