Kenya’s Nzoia Sugar leased to Jaswant Rai in 30-year deal
Privatization deal promises debt settlement and job security but raises questions over transparency and market concentration.
KENYA – Kenya’s Nzoia Sugar Factory is officially set to be leased to private management following a government agreement with businessman Jaswant Rai.
The 30-year lease marks a significant step in the government’s effort to revive the struggling sugar sector, which has been plagued by debt, mismanagement, and delayed payments to farmers and workers.
According to Alfred Khang’ati, chairman of the Nzoia Sugar Factory board, the move is expected to enhance operational efficiency and support the livelihoods of sugarcane farmers and factory employees.
He stated that the Kes 200 million (US$1.55M) owed to farmers would be paid before the end of the current financial year, and all workers would be retained for a minimum of one year under the new arrangement.
Board member Bonface Otsiula confirmed the transition and said the agreement aligns with the government’s broader sugar sector reforms.
He emphasized that the lease agreement with Rai has already been signed, signalling the factory’s shift from public to private hands in the coming weeks.
The lease is, however, facing legal hurdles. A case has been filed to challenge the deal, raising issues around the transparency of the privatisation process and concerns about stakeholder exclusion.
Critics argue that the government failed to consider other potential investors, fuelling fears of a sugar industry monopoly due to Rai’s extensive holdings in the sector.
Rai, who owns West Kenya Sugar, Sukari Industries, and Olepito Sugar, also holds stakes in companies such as Menengai Oil, Timsales, Tulip Properties, RaiPly, and Webuye PanPaper. The consolidation of these firms has prompted calls for regulatory scrutiny over possible market dominance.
Nzoia Sugar, established in 1975, is 98% owned by the government. It manages a 3,600-hectare nucleus estate and supports 23,500 hectares of outgrower farmland.
Other minority stakeholders include Fives Cail with 1.13% and the Industrial Development Bank with 0.93%, according to a 2021 audit by the Office of the Auditor-General.
Meanwhile, the President recently reiterated the government’s intention to revitalize Sony Sugar in Migori using a recovery plan modeled after the ongoing reforms at Mumias Sugar Company.
The strategy will involve the appointment of a new management team focused on improving efficiency and prioritizing farmer interests.
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