Government leases four sugar factories, to pay Sh. 6 billion to farmers

The government has completed the leasing of four sugar factories: Nzoia, Chemelil, Sony and Muhoroni, and agreed to pay Sh. 6 billion owed to farmers by July this year.

The Ministry of Agriculture and Livestock Development said the move will address salary arrears owed to sugarcane workers and secure the future of both cane farmers and sugar factories.

"Following lengthy negotiations, the government has agreed with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW) to safeguard the interests of sugar factory workers," said Cabinet Secretary Mutahi Kagwe.

Under the agreement, the government will settle arrears owed to both farmers and workers before the handover of the factories to private millers.

Over Sh. 1.7 billion was paid to sugarcane farmers last year to clear arrears owed by sugar factories.

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There will be a 12-month transition period during which the four lessees will evaluate their workforce needs and decide on the retention of current employees.

The Ministry will also remain responsible for unpaid salary arrears, pension contributions and statutory deductions up to the lease handover date.

The decision to lease the factories follows extensive consultations with stakeholders, including farmers, workers, unions, Members of Parliament and Governors. The Cabinet also approved the deal.

"It was informed by the need to ensure a return on investment for taxpayers, who have, over the years, bailed out the ailing sugar sector," said Kagwe.

"Last year, the government wrote off over Sh. 117 billion to bail out the local sugar industry and injected an additional Sh. 2.5 billion to clear arrears owed to farmers and workers," he added.