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Why sugar miller Rai is set to be on many lips

Saturday April 11 2015

Workers harvest cane in Kisumu. Rai Holdings is emerging as a key player in the East African sugar sector with its business spreading fast in Kenya and Uganda. PHOTO | TOM OTIENO |

Workers harvest cane in Kisumu. A team that oversees the privatisation of government-owned companies has opposed plans by county governments to buy five sugar millers in western Kenya. PHOTO | TOM OTIENO | NATION MEDIA GROUP

Rai Holdings is emerging as a key player in the East African sugar sector with its business spreading fast in Kenya and Uganda.

The family business that owns West Kenya Sugar Ltd also holds a majority stake in the fast-rising Kinyara Sugar Works in Uganda.

The business could be the biggest beneficiary in the fight between Uganda and Kenya where Uganda is pushing to access a larger share of the local sugar market.

Uganda sugar stakeholders last year lobbied hard, enlisting the support of President Yoweri Museveni to claim part of the Kenya sugar market after exporters were reportedly frustrated at the border when bringing the commodity into Kenya.

They argued that under the trade agreement signed by the East African Community bloc, they were entitled to export sugar into Kenya.

Thereafter, it was agreed that all that exporters had to to do was to acquire mandatory licences — which should be issued in a week.

Although Rai Holdings say they are yet to take advantage of the common market protocol signed by EAC member states to export sugar across the borders, they are set to become the dominant player in the region in the coming years.

“We do not bring in sugar to Kenya because transport would be expensive. We would also not want to upset the different markets in Uganda and Kenya. But we would want to see countries like Tanzania and Rwanda buying more from the region in line with the EAC common market protocol,” said the firm’s managing director, Mr Tajveer Ray.

According to statistics from Uganda, Kinyara Sugar Works is the second-largest producer of the commodity after the Uganda government-owned Kakira Sugar Ltd.

Rai Holdings — which also owns Sukari Industries in Homa Bay County and has been given a licence to set up another factory in Busia County — is the second-largest producer of sugar in Kenya after Mumias.

West Sugar crushes 4,000 tonnes crushed daily (TCD); Sukari crushes 2,000.

Kinyara Sugar’s growth for 2015 is projected at 125,000 tonnes, compared with 122,000 tonnes last year. The largest producer, Kakira, is expected to increase its production from 180,000 tonnes to 185,000 tonnes.

The Government of Uganda sold a 51-per cent stake in Kinyara Sugar Works to Rai Holdings in 2006, making it a major player in the country’s sugar sector.

“Our secret has been prompt payment to farmers. We have been paying them weekly since inception and it is working for us,” Mr Ray said.