Government pays sugar factory workers Ksh 600 million as part of arrears

The Kenya Union of Sugar Kenya Plantation and Allied Workers (KUSPAW) has confirmed receipt of Ksh 600 million as part of the arears owed to its members by the government.

KIUSPAW secretary Francis Wangara said that it is the first phase of the Ksh. 5.3 billion owed to workers leaving Ksh. 4.7 billion in arears.

Wangara told his members that another tranche will be settled in July this year.

Speaking in Kisumu, Wangara said the government has entered into an agreement with the union to safeguard the interests of sugar factory workers.

“KUSPAW has since signed a Memorandum of Understanding (MOU) under which the government, (as the Lessor) there will be a 12-month transition period during which the 4 Lessees shall evaluate their workforce needs and determine the criteria for the retention of current employees,” Wangara said.

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Earlier agriculture cabinet secretary Mutahi Kagwe revealed that the MoU states that the Ministry shall remain responsible for all unpaid salary arrears, pension contributions, and statutory deductions up to the lease handover date.

It further says that a phased payment schedule shall be adopted as where Ksh. 1 billion will be paid to workers upon takeover (600 million to pay part of the staff arrears and the remaining 400 million to pay salary as from the month of May 2025).

The agreement further indicates that Ksh. 1.5 billion will be released in July, 2025 to be used for the payment of staff salaries and arrears.

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It goes ahead to state that the government shall continue to pay salaries arrears at the rate of Ksh1.17 billion (to be verified) on a quarterly basis until 30th June 2026

The decision to lease out the four sugar factories, the minister enumerated, was arrived at after lengthy consultations with key stakeholders across the sugar sector including farmers, sugar factory workers, unions, Members of Parliament, Governors and approvals by the cabinet.

‘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. Last year the government wrote off over Ksh. 117 billion to bail out the local sugar industry and injected an additional Ksh. 2.5 billion to clear arrears owed to farmers and workers.’ He said.

He said the procurement of the four firms follows broad-based engagement with stakeholders across the sugar sector, dating back to 2015 when Parliament approved the process.

The statement says the assets will be leased out to the lessees annually based on the prevailing market rate with all proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the 4 factories and for utilization in cane development.

The four firms, according to Kagwe, were competitively procured by the government through the Ministry of Agriculture and Livestock Development, the Kenya Sugar Board, and other government key players.

By Fredrick Odiero

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