The government is expected to settle arrears owed to both farmers and workers before the handover of the four sugar milling factories to private millers.
According to a statement released by Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe; the government last year paid out over Ksh. 1.7 billion to sugarcane farmers to clear arrears owed by sugar factories.
Since then, the factories have accrued Ksh. 500 million for cane delivered by farmers. Under the agreement the government will pay farmers the Ksh. 500 million in July this year.
The government in the statement says paid over Ksh. 600 million were paid to factory workers last year out of the Ksh. 5.3 billion owed to workers leaving Ksh. 4.7 billion in arrears.
Since then, it further says, the arrears owed to factory workers have accrued to an estimated Ksh. 5.6 billion.
Subsequently according to the statement, the government has entered into an agreement with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW) to safeguard the interests of sugar factory workers.
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“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,” Kagwe said.
The Statement further stated 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.
A phased payment schedule shall be adopted as when 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).” Reads the statement.
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.
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 CS said that the decision to lease out the four sugar factories, the statement enumerates, 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,” said CS Kagwe in the statement.
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He went ahead saying that 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 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 statement reads.
The four firms, according to the press release, 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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