It is time to eject parasites sucking Mumias dry and save cane farmers
A file photo of some of the sugarcane farmers in Nyaporo Village, Mumias East constituency, who have in the past complained about delays in payment for their deliveries to Mumias Sugar Company.
What you need to know:
- In my view, the turnaround plan crafted by Mr Ruto and Mr Kosgey represents the best chance of reviving the company.
- When the county government lent the company Sh300 million to pay farmers, you would have expected that the transaction would be through a cheque in the name of the company.
- KPMG should be contracted to deliver on the business review study it conducted, which concluded that Mumias is still viable. Let us consider the plight of the sugarcane farmer.
In plain English, Mumias Sugar Company Ltd has been put under statutory management by the government, the single largest shareholder with a 20 per cent stake in the company.
Effectively, boardroom power and influence is shifting towards two entities: the audit firm, KPMG, which will serve as the de facto statutory manager, and a group of lenders the company owes Sh6.2 billion.
My guess is that we will now have a situation where the lenders will have representation on the new board, presumably by the mandated lead arrangers who have been handling Mumias matters on their behalf, namely, the head of corporate banking at EcoBank, Mr Peter Makau, and the regional head of investment banking at KCB Capital, Mr Onchi Maiko.
In one fell swoop, the domination of the board by political appointees has come to an end. As we went to press, three members of the board, Sarah Serem, Nimrode Namenge and Edwin Mukabana had reportedly resigned
And if things go according to plan, most of directors, including the chairman and CEO, may find themselves forced out during a scheduled special general meeting, where the government intends to exercise its clout as the single largest shareholder of the company to vote them out.
The key drivers of this bold plan are Deputy President William Ruto, and minister for Agriculture Felix Kosgey.
The government has insisted that it is not prepared to throw money at the company until a complete regime change has been effected.
Last week, Mr Ruto put the position of the government even more bluntly during a consecration ceremony for Bishop Joseph Obanyi of Kakamega. The government, he stated, would not give the money to Mumias Sugar until “the thieves running the company” have been removed.
The language may have been rough and undiplomatic, but it is the same message that the lenders have been sending. “There must be a break with the past history of questionable dealings,” the lenders said in a briefing.
BEST CHANCE
In my view, the turnaround plan crafted by Mr Ruto and Mr Kosgey represents the best chance of reviving the company. You will not get anywhere with Mumias if you do not dismantle the nexus between distributors, transporters, directors, and top managers, who have made a complete mess of pricing and marketing.
You must dismantle and disperse the elite group of distributors and transporters and their cohorts within the board and management who have been siphoning billions from the company through opaque discounts, duplicated credit notes, and opaque forward contracts.
Even after the first batch of the top management was sent home and a new board installed last December, the game of discounts and opaque credit notes to well-connected individuals did not stop.
When the county government lent the company Sh300 million to pay farmers, you would have expected that the transaction would be through a cheque in the name of the company.
The conspirators used the excuse that the county government cannot trade and disbursed the money through an opaque and circuitous route. The money never arrived in the accounts of the company.
A few weeks ago, a Nairobi-based distributor said to have links to a senior board member with a large warehouse in Karen negotiated a contract with huge discounts.
I am not surprised that sections of the elite from western Kenya are reading a political motive in the removal of the company’s board members and top management.
However, the priority right now should be the poor sugarcane farmer, not jobs for the local boys. I want to hear that over-surveys of farms have stopped, that farmers are not losing money from their dues for fertiliser and inputs that they did not receive.
What Mr Ruto and Mr Kosgey are rolling out offers the best chance for reviving the company. Because the lenders have been looped into the deal, you can now easily negotiate a moratorium on both the principal and the interest on debt.
KPMG should be contracted to deliver on the business review study it conducted, which concluded that Mumias is still viable. Let us consider the plight of the sugarcane farmer.
