In 2022, Kenya will be celebrating 100 years since the first sugar factory was set up in Kenya, marking the beginning of industrial sugar in Kenya. Industrial sugar was introduced in Kenya in 1902 and the first processing factory opened in 1922.
Despite this, the “sweet” industry in Kenya has been giving Kenyans bitter pills in terms of prices and substandard sugar flooding the market from time to time.
In November 2021, the wholesale price of sugar rose by 23 percent in just one month for a 50-kilogramme bag, marking it one of the biggest hikes in sugar prices.
The hike was attributed to a shortage in the market caused by a disruption in production by factories in western Kenya.
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The mention of Western Kenya is synonymous with Kenya’s sugar hub, with leading factories such as West Kenya Sugar Factory, Mumias Sugar Factory, Sony Sugar, Kibos Sugar, Kwale International Sugar Company Limited, Sukari Industries Limited, Butali Sugar Mills, Transmara Sugar Company and Kisii Sugar Factory among others.
Despite having numerous sugar industries and thousands of hectares of sugar plantations, Kenya still imports tons of sugar, and the prices still remain high.
Industrial production of sugar reached a high of 603,800 tonnes in 2020 up from 440,900 tonnes in 2019, attributed to increased sugarcane production. According to the Economic Survey of 2020, the production of sugar cane in Kenya increased to roughly 6.8 million metric tons, up from 4.6 million metric tons in the previous year. This represented a growth of nearly 50 percent.
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Imports declined by 3.1 percent from 458,600 metric tonnes to 444,500 tonnes in 2020, mostly duty-free imports from the Common Market for Eastern and Southern Africa (Comesa).
Despite the promising statistics, there is nothing promising for consumers and farmers, who are the main contributors to the sector.
The sector should have been made better by the presence of government-owned sugar millers such as Mumias Sugar Company, Nzoia Sugar Factory, South Nyanza Sugar Company, Muhoroni Sugar Company and Chemelil Sugar Factory. However, the factories have been some of the major failures in the sugar industry.
Take for example Mumias Sugar Company, which was once the giant sugar miller is now leading in making headlines after it collapsed due to mismanagement.
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The burden is not on Mumias Sugar alone. As of February 2020, the debt owed by State-run sugar millers had risen to Ksh90.4 billion. The amount includes outstanding loans, taxes, penalties and fines due to the government.
The collapsed Miwani Sugar has an outstanding debt of Ksh27 billion while Muhoroni Sugar owes Ksh25.1 billion. Sony Sugar owes the government Ksh6.2 billion while Chemilil owes Ksh6.1 billion.
Despite the National Assembly approving the write-off of excess debt owed by the millers in 2013 for the period up to 2009, the millers are yet to find a footing, after the approval was stopped through litigation.
“The companies have for a long time incurred losses resulting into negative returns on investment. Thus, due to the accumulated losses, the companies’ net worth had been systematically eroded to the extent that by June 2018, only Sony Sugar Company had a positive net worth of Ksh0.5 billion,” a report released in 2020 said.
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According to a 2010 report by the Ethics and Anti-corruption Commission (EACC), low productivity, un-competitiveness, poor governance, corruption and weak policy and legal framework are the major issues bedeviling the sugar industry in Kenya.
“The governance and management challenges are manifested in the way decisions are made and implemented by key actors on matters of sugar importation, privatisation of sugar mills, negotiations on COMESA and other international agreements affecting the sub-sector. In addition, persistent political interference in the appointments of chief executives of mills, board members, KSB elections and other key auxiliary agencies associated with the sub-sector further compound the governance problems bedeviling the sub-sector,” said EACC.
The study reveals that corruption and mismanagement permeate nearly all the institutions connected to the sub-sector. Corruption is reported to be practiced in the appointment of chief executives of mills, the employment and promotion of staff in the mills, loss/theft of sugar from factories, and the process of accessing loans.
EACC reported that the networks of mega-corruption are reported to run deep in the sub-sector involving Kenya Sugar Board officials, managers of mills, managers of out-grower institutions and senior public officials to gain advantage in the distribution of the Sugar Development Fund (SDF).
Similarly, corruption and influence-peddling are practiced in the issuance of licenses to new sugar factories in contravention of the guidelines in the Sugar Act 2001, and for the importation of duty-free sugar into the country.
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