Kenya Sugar Industry Responds to Cash Boost

Kenya’s sugar industry is receiving a much-needed cash injection as millers fail to pay farmers for increasingly expensive sugarcane because of illegal imports.

Many government-backed sugar firms now owe cane farmers several months’ worth of arrears as cheap illegal imports have flooded the market and reduced sales at domestic firms.

In response, the government has pledged 47bn shillings ($588mn) of debt write-offs ahead of the privatisation of many firms.

As part of this package, the Kenya Sugar Board has authorised a loan to Muhoroni Sugar Company so that it can pay-off each of its cane supplies Sh144mn in debt.

Elsewhere, Mumias Sugar Corporation is changing tack and targeting the retail, as opposed to wholesale, market.

In February, Mumias reported a 73% drop in half year profits, despite slashing the price of its 50kg bag products. Many other local firms have been forced to sell at lower-than-production prices.

In an effort to raise funds, Mumias is also increasing its power generating capacity and plans to send a surplus back into the grid of 26MW, up from 3MW. This will begin in April and is set to cost the firm $54mn.

Others to receive state help included Chemelil, Sony, Nzoia and Miwani.

By Natalie Coomber.