The government has given a strong assurance to thousands of employees in the sugar industry that their salaries and pensions will be taken care of during the transition period, after four major state-owned sugar factories were officially leased to private companies.
In a formal announcement, Agriculture Cabinet Secretary Mutahi Kagwe confirmed that the government had finalized the leasing of Nzoia, Chemilil, Sony, and Muhoroni sugar factories to private investors for a period of 30 years. This move has left many workers uncertain about their future.
According to the leasing agreements, Nzoia Sugar Company has been handed over to West Kenya Sugar Company, Chemilil has gone to Kibos Sugar & Allied Industries, Sony Sugar has been leased to Busia Sugar Industry Ltd, and Muhoroni has been taken over by West Valley Sugar Company.
To help ease the concerns of employees, the Ministry of Agriculture explained that there would be a 12-month transition period. During this time, the four private companies will evaluate their operational needs and decide which of the current employees they will retain.
The Ministry has promised to handle all the financial obligations owed to the workers, including pending salary arrears, pension contributions, and statutory deductions, up to the date the lease was finalized.
A clear payment plan has already been outlined to ensure that workers are paid what they are owed.
As part of this financial commitment, the government will release Ksh1 billion at the time of the handover.
Out of this amount, Ksh600 million will be used to pay part of the existing salary arrears, while the remaining Ksh400 million will go toward paying staff salaries starting from May 2025.
In addition, a further Ksh1.5 billion will be disbursed in July 2025 to help cover employee salaries and any remaining arrears.
The government has also set a firm deadline of June 30, 2026, by which time all salary payments will be completed. After this date, the private companies taking over the factories will assume full responsibility for the workforce.
To ensure consistency and accountability, the government plans to release Ksh1.17 billion every quarter toward clearing salary arrears until the June 2026 deadline. However, the exact figure is still under verification.
CS Kagwe emphasized that the leasing arrangement was made after extensive consultations with various key stakeholders in the sugar industry.
These included farmers, sugar factory employees, union leaders, Members of Parliament, Governors, and other interested parties. The leasing plan also received full Cabinet approval.
The government maintains that leasing out these struggling companies is the best possible solution to prevent their complete collapse.
CS Kagwe noted that the move will inject essential private capital into the sector and help revive operations.
However, the leasing decision has sparked mixed reactions among the public and stakeholders. Critics have raised concerns that the process might be a disguised way of selling off the factories and their valuable properties, particularly land.
In response to these fears, the Ministry clarified that no public land will be sold or transferred as part of the lease agreements.
All properties, including land, that belong to the four sugar factories will remain under the ownership of the national government.
“All the assets of the four companies, including their land, will stay under the control of the government,” said CS Kagwe, addressing public concerns.
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