Govt urged to privatise state-owned sugar factories for them to be competitive

Thursday August 20 2015

Mr Kiprono Kittony, the chairman of the Kenya National Chamber of Commerce and Industry. Kenya and China have launched an online window to cut out middle men and reduce logistics cost for import and export trade between the two countries. FILE PHOTO | SALATON NJAU | NATION MEDIA GROUP

Mr Kiprono Kittony, the chairman of the Kenya National Chamber of Commerce and Industry. Kenya and China have launched an online window to cut out middle men and reduce logistics cost for import and export trade between the two countries. FILE PHOTO | SALATON NJAU | NATION MEDIA GROUP 

OUMA WANZALA
By OUMA WANZALA
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The chamber of commerce has asked the government to speed up the privatisation of sugar factories in the country to foster their competitiveness.

Kenya National Chamber of Commerce and Industry (KNCCI) chairman Kiprono Kittony said about 36 per cent of sugar companies in the country are government-owned and should be privatised.

“Let’s not make the sugar issue political, as Kenya will lose its competitiveness globally,” warned Mr Kittony, noting that Kenya is a member of Comesa and the East African Community and also has tripartite agreements with other countries in the region.

He said the country could not continue to seek protection forever and instead the government should help the sector become competitive.

He insisted that no agreement on sugar imports was signed during a recent visit by President Uhuru Kenyatta to Uganda.

Instead, it was a memorandum of understanding that was signed.

“We signed a memorandum of understanding on a broad framework of engagement that will allow us to engage with our counterparts in Uganda,’’ said Mr Kittony in an interview on Citizen TV.

AGEING EQUIPMENT

He said the sugar factories are operating with ageing equipment and high costs of production, noting that Kenyan sugar is the most expensive in the world.

He, however, acknowledged that the chamber is concerned about the role of sugar barons and cartels and asked the government to look into the sugar regime.

Mr Kittony said the cost of production in the country should be addressed, noting that 53 tonnes of sugar are produced from one acre while in Zambia about 100 tonnes are produced per acre.

He also urged millers to diversify to other areas, such as co-generation and ethanol production.

The chairman also called for the appointment of a substantive Cabinet secretary for Agriculture following the suspension of Mr Felix Koskei early this year.

Mr Adan Mohamed has been the acting CS since then.

However, Nzoia Sugar Company chairman Joash Wamango’li opposed the idea of privatising sugar factories, saying that privatisation would not address the challenges facing the sector, one of which is lack of proper management.

"Let us have managers who can perform and deliver. Privatisation will not save the sector," said Mr Wamang’oli.

He said Kenya will next year be able to produce surplus sugar as several companies will have increased their production.

Mr Wamang’oli added that a lot of sugarcane was still on farms waiting to be harvested.

HIGH PRODUCTION COST

Kenya National Federation of Sugarcane Farmers chief executive Francis Waswa asked the government to address the high cost of production, from land preparation to harvesting.

Mr Waswa said politics had taken centre stage in the whole issue at the expense of the farmers.

“Sugarcane farmers have been ignored, mistreated, underpaid and their payment delayed,” added Mr Waswa.

He acknowledged that the country has not been producing sufficient sugar and was therefore compelled to import the sweetener. However, he maintained that the sugar industry in the country is still viable.

He called for the formation of a task force to look at the challenges facing the sugar industry.

Mr Waswa lamented that some players such as sugarcane transporters were fleecing farmers as there are no regulations.

Kenya consumes 900,000 metric tonnes of sugar per year against an annual output of 600,000 tonnes, while Uganda, on the other hand, produced 438,360 tonnes of sugar last year against a demand of 403,874 tonnes.