The Ministry of Agriculture and Livestock Development has secured a Ksh. 12.29 billion investment to revive four key state-owned sugar factories—Nzoia Sugar, Chemilil Sugar, Sony Sugar, and Muhoroni Sugar. This funding will come from four private companies that have each been awarded a 30-year lease to operate and rehabilitate one of the factories. The goal of this partnership is to restore the factories to full operational capacity, protect the livelihoods of workers, and boost earnings for sugarcane farmers, reports KBC.
West Kenya Sugar Company will take over the management of Nzoia Sugar Company and inject Ksh. 5.76 billion into its revival. Kibos Sugar & Allied Industries Ltd. will invest Ksh. 4.5 billion in Chemilil Sugar Company, while West Valley Sugar Company Ltd. will commit Ksh. 1.02 billion to Muhoroni Sugar Company. Busia Sugar Industry Ltd. will invest Ksh. 1 billion into Sony Sugar Company. These investments are intended to bring the mills back to full working order, improve efficiency, and increase sugar output.
Alongside the capital investments, the companies will pay a combined total of Ksh. 521.97 million in goodwill for leasing the land on which the factories sit. The amount is calculated based on land size and cost per hectare. West Kenya Sugar Company will pay Ksh. 208.3 million for Nzoia Sugar’s 4,629 hectares. Kibos Sugar & Allied Industries will pay Ksh. 111.2 million for Chemilil’s 2,779.75 hectares. Busia Sugar Industry will pay Ksh. 122.4 million for Sony Sugar’s 3,059.91 hectares, while West Valley Sugar Company will contribute Ksh. 80.08 million for Muhoroni’s 2,002 hectares.
In addition to goodwill payments, the companies will be required to pay annual lease fees at the start of each year. These funds will be used to support sugarcane development and improve the welfare of communities living near the factories. The government will also use part of the money to settle outstanding payments owed to both farmers and sugar factory workers.
To further support the sugar industry, the Kenya Sugar Board will collect concession fees from the lessees. A total of Ksh. 1.5 billion will be collected from sugar production, based on a rate of Ksh. 4 per kilogram, and another Ksh. 240 million from molasses production, at a rate of Ksh. 3 per kilogram. These amounts will be redistributed to farmers as annual bonuses depending on how much sugarcane they supply to the factories.
The government has already paid more than Ksh. 1.7 billion to farmers to clear past dues and has committed to paying an additional Ksh. 500 million in July 2025 for recently delivered cane. To safeguard the interests of factory workers, the government has entered into an agreement with the Kenya Union of Sugar Plantation and Allied Workers. As part of this deal, Ksh. 600 million will be allocated to settle part of the workers’ arrears, and Ksh. 400 million will be used to cover six months’ salaries starting in May 2025.
A phased payment plan has also been introduced to settle all arrears owed to workers in the four factories. Under this plan, the government will release Ksh. 1.5 billion in July and continue to make quarterly payments of Ksh. 1.17 billion until all dues are paid.
Agriculture Cabinet Secretary has reassured farmers, workers, and the public that none of the sugar mills have been sold. He emphasized that the leasing process was conducted transparently, in accordance with procedures approved by Parliament, and involved consultations with various stakeholders. The decision to lease the factories was made as part of a broader strategy to revive the sugar industry and ensure long-term sustainability for everyone involved.
