By all measures, Kenya’s sugar industry has been a staggering giant, once proud, now propped up by debt bailouts, political patchwork, and perennial dysfunction. But in a bold stroke aimed at shaking the industry from its coma, Agriculture Cabinet Secretary Mutahi Kagwe has announced the long-awaited leasing of four major state-owned sugar factories to private millers. Whether this move marks a new dawn or another chapter in the industry’s troubled history remains to be seen.
The four factories, Nzoia, Chemelil, Sony, and Muhoroni, will be operated under 30-year leases by West Kenya Sugar, Kibos Sugar & Allied Industries, Busia Sugar Industry, and West Valley Sugar Company. This decision follows years of extensive consultations, court battles, and a revised parliamentary consensus that the more pragmatic path was to shelve privatisation in favour of leasing.
But to understand the significance of this leasing arrangement, one must look squarely at the woes that have plagued the sugar industry for decades.
Kenya’s sugar industry has historically been a critical source of livelihood for millions, yet mismanagement, politicization, outdated equipment, and rampant corruption turned it into a bottomless pit. Once-thriving public factories accumulated billions in losses, became hotbeds of labor unrest, and could not compete with cheap imports.
In 2023 alone, the government injected Ksh. 2.5 billion to pay off arrears and wrote off an eye-watering Ksh. 117 billion in debt to save the sector. But despite these lifelines, the sector continued to hemorrhage.
One core issue has been unpaid arrears owed to both cane farmers and factory workers. As of 2025, farmers are owed Ksh. 500 million, while workers are owed over Ksh. 5.6 billion. Previous interventions, ranging from debt write-offs to bailout packages and even proposals for privatisation, have done little more than postpone the inevitable collapse.
The sugar sector’s decline is not due to a lack of effort, but rather the failure to follow through. In 2015, Parliament initially supported privatisation as a turnaround strategy. However, that plan faltered due to resistance from vested interests, legal hurdles, and confusion over public land ownership. A task force formed in 2018 reaffirmed the need for capital injection through strategic investors, but little progress was made.
Subsequent parliamentary and cabinet actions in 2023 finally steered consensus toward leasing. Public participation, including hearings and stakeholder meetings, culminated in a judicial affirmation that the process complied with the law. But even with legal and political hurdles cleared, history has shown that implementation, especially in Kenya’s politicised agricultural sectors, is the Achilles’ heel.
What sets Kagwe’s strategy apart is not just the leasing model, but the layered agreements designed to address the historical baggage. Key features of his plan include:
Clearing Debts Before Handover: The government will pay the Ksh. 500 million owed to farmers and Ksh. 5.6 billion in salary arrears to workers under a phased schedule running through June 2026.
Transition Period for Employees: A 12-month period will allow lessees to assess staff needs, with the government retaining responsibility for existing wage and pension obligations.
Retention of Public Assets: No public land is being sold. All factory assets remain government-owned, with leasing revenues earmarked for community development and cane farming support.
Transparent Selection: The four firms were competitively procured through a collaborative process involving the Ministry of Agriculture, Kenya Sugar Board, and Treasury, with the backing of elected leaders from sugar-growing counties.
Despite the promise, this move is not without risks. Private millers, though better capitalized, may prioritize profitability over social obligations. There’s also the challenge of ensuring fair treatment of current employees after the 12-month transition. Furthermore, the track record of state agencies in enforcing lease conditions is, at best, patchy.
Then there’s the concern of entrenched cartels and illegal sugar imports. Without strong regulatory oversight and market discipline, even a leased factory can be rendered ineffective.
Kagwe’s leasing plan may be the most viable attempt yet at reviving Kenya’s ailing sugar sector. Its success, however, will hinge on the government’s ability to enforce lease terms, monitor lessee performance, and honor its debt repayment commitments. For farmers and workers, optimism is tempered with caution they’ve seen this play before.
Still, Kagwe has done something few predecessors managed: secure stakeholder consensus, legal backing, and a structured financial plan. Whether it bears sweet fruit or withers into another failed reform depends not just on policy but on political will, oversight, and execution.
