The government has pledged to clear all pending payments owed to sugarcane farmers and factory workers before handing over four State-owned sugar factories to private operators. This was announced by Agriculture Cabinet Secretary Mutahi Kagwe in a statement released on Friday, reports The Standard.
According to the statement, West Kenya Sugar Company will take over the operations of Nzoia Sugar Company, while Kibos Sugar and Allied Industries Ltd will lease Chemelil Sugar Company. Busia Sugar Industry Ltd will manage Sony Sugar Company, and West Valley Sugar Company Ltd, based in Kericho, will operate Muhoroni Sugar Company. Each lease agreement is set for 30 years.
Kagwe confirmed that the Ministry of Agriculture has reached an agreement with sugarcane farmers and workers’ unions to settle all cane delivery and salary arrears before the official handover of the factories. This announcement follows recent protests by farmers and workers who had accused the government of moving forward with leasing plans without involving the public.
The Cabinet Secretary stated that the agreement aims to protect the livelihoods of both farmers and workers during the transition. He said the government had already paid over Sh1.7 billion to farmers last year and would release an additional Sh500 million by July this year to cover new arrears.
For factory workers, the government paid Sh600 million last year out of a total Sh5.3 billion owed. The total debt has since risen to Sh5.6 billion. To address this, Kagwe outlined a phased repayment plan, which includes an initial Sh1 billion payment upon the takeover — Sh600 million will go toward settling part of the salary arrears, while the remaining Sh400 million will cover salaries starting May 2025.
Another Sh1.5 billion is scheduled for release in July 2025 for continued salary payments and arrears. Additionally, the government will maintain quarterly payments of about Sh1.17 billion through June 2026 to continue reducing outstanding debts.
To ensure a smooth transition, Kagwe said the government and the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW) signed a Memorandum of Understanding. Under this deal, there will be a 12-month transition period for the new operators to assess staffing needs and decide on the retention of existing workers. During this time, the Ministry will remain responsible for unpaid salaries, pension contributions, and other statutory obligations.
Kagwe emphasized that the decision to lease out the factories was made after extensive consultations with stakeholders, including farmers, factory workers, unions, Members of Parliament, county governors, and following Cabinet approval.
He also revealed that the government had previously written off Sh117 billion to support the local sugar industry and injected an additional Sh2.5 billion to clear debts owed to farmers and workers.
Kagwe assured the public that the negotiated terms represent the best way forward for revitalizing the struggling sugar sector.
