Kenya leases four sugar factories to private firms in major sector revamp
Kenya transfers operations of four state-owned sugar firms to private millers under a 30-year lease to boost sector recovery.
KENYA – Kenya has finalized the leasing of four state-owned sugar factories to private investors, marking a significant milestone in the government’s long-standing plan to revive the country’s struggling sugar industry.
The move is expected to inject much-needed capital, expertise, and efficiency into the sector while preserving public ownership of strategic assets.
Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe announced that the operations of Nzoia, Chemelil, Sony, and Muhoroni sugar companies have been officially handed over to private millers under a 30-year lease agreement.
According to the new arrangement, West Kenya Sugar Company will operate Nzoia Sugar; Kibos Sugar and Allied Industries will manage Chemelil; Busia Sugar Industry Ltd takes over Sony Sugar; and Muhoroni Sugar will be run by West Valley Sugar Company.
Kagwe stated that the leasing initiative stems from broad consultations dating back to 2015, involving Parliament, county leadership, farmers, factory workers, and other stakeholders.
He emphasized that the decision to lease the factories was made after rejecting full privatization in favor of a model that maintains government oversight while allowing private entities to manage operations.
“This is not just about turning profits; it’s about restoring dignity to the thousands of families that depend on sugar farming and processing,” said Kagwe.
“The sugar sector has drained billions from taxpayers over the years. Now it’s time we let strategic investment drive its transformation.”
He explained that the government will retain ownership of all land and infrastructure, with leases based on market value. Revenues generated will be channeled through the Kenya Sugar Board to support local community development and sugarcane farming initiatives.
To address the long-standing issue of debts owed to workers, the government has signed a Memorandum of Understanding with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW).
The agreement outlines a 12-month transition period during which the new millers will evaluate and determine their staffing needs.
Meanwhile, the government will remain responsible for outstanding salary arrears, pensions, and statutory deductions.
Payments will commence with Kes 1 billion in May—Kes 600 million (US$4.6M) for arrears and Kes 400 million (US$3.1M) for current wages—followed by Kes 1.5 billion (US$11.61M) in July. Thereafter, quarterly disbursements of Kes 1.17 billion (US$9.1M) will continue through June 2026.
Kagwe assured stakeholders that the transformation is intended to rebuild Kenya’s sugar belt and create a sustainable path forward for the entire industry.
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