Kenya approves US$51.3M to clear sugar mill debts 

KENYA – Kenya’s Ministry of Agriculture has approved a budget of KES654 million (US$51.3M) for the 2023/2024 fiscal year to aid struggling sugar millers in clearing debts owed to farmers and workers.  

Agriculture Principal Secretary Paul Rono announced this allocation as part of the government’s efforts to reform the sugar sector. 

Out of the total funds, KES354 million (US$2.8M) will be dedicated to settling debts owed to farmers at Nzoia, Muhoroni, Chemelil, and Sony millers.  

Additionally, KES150 million will be used to clear three months’ salary arrears for Nzoia Sugar workers, while the remaining KES150 million (US$1.2M) will address similar arrears at other millers. 

Board Chairman Alfred Khang’ati said, “We appreciate the president and local leadership for advocating our revival. Payment details for workers and farmers have been submitted to AFA, with disbursements expected from Friday.” 

Nzoia Sugar will receive KES54 million specifically to clear its debts to farmers, effectively making the company debt-free. “The previous payments covered 80 percent of farmers’ dues; the rest will be settled now,” Khang’ati noted.  

Additionally, the allocated KES150 million will cover three months’ salary arrears for Nzoia workers, who are currently owed a total of nearly KES1.8 billion (US$14.12M) for 24 months of work. 

Khang’ati assured that ongoing milling operations would ensure prompt payments and proper factory maintenance. “AFA manages the Sh654 million (US$51.3M) to ensure transparency,” he added. 

This financial support comes in response to recent calls from sugarcane farmers in Western Kenya, urging the President to address the debts owed by state mills to farmers.  

At the beginning of the year, five state-owned sugar companies had outstanding debts totaling KES128.07 billion US$1B). In June, President William Ruto announced the cancellation of KES110 billion (US$841.36M) in debts owed by sugar factories. 

Furthermore, the President introduced a new leasing model to ensure prompt payments for cane deliveries, timely wages for factory workers, and annual bonuses for sugarcane farmers.  

He also called on relevant agencies to expedite the review process and include proceeds from by-products in the industry. An initial KES600 million has been approved for seed cane development, part of a larger KES2 billion (US$15.3M) investment plan. 

These initiatives have been welcomed by sugarcane stakeholders in the Western region.  

Richard Ogendo, Secretary General of the Kenya Sugarcane Growers Association (KESGA), projected that with continued government support and investment in private sugar mills, Kenya could potentially transform from a net importer to a net exporter of sugar, with a surplus of 150,000 metric tonnes ready for export. 

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