Farmers prepare to buy shares in sugar factories

Farmers in the sugarcane growing zones are preparing to buy shares in five government-owned factories as they seek significant stakes in the firms.

The cane growers have started marshalling resources through investment firms in anticipation of the long-awaited divestiture by the government from the heavily-indebted millers.

Chemelil, Sony, Miwani, Nzoia and Muhoroni sugar factories are earmarked for privatisation in the next financial year.

But the government is yet to decide whether the sale will happen through an initial public offering (IPO) or through strategic investors.

Their privatisation, which is part of a deal Kenya signed with the regional trading bloc, Common Market for Eastern and Southern Africa (Comesa), have been delayed because of millers’ debts now standing at about Sh50 billion.

Agriculture minister, Mr William Ruto, recently said the cash was owed to the government, farmers and suppliers.

“We want to restructure the operations of factories to enable them have a clean balance sheet ahead of the privatisation programme. The government will step in to assist them to pay part of the debt,” said Mr Ruto.

Comesa gave Kenya until 2012 to restructure the its industry and return the millers to profitability, a move that was aimed at making the local industry competitive in the face of Comesa imports.

This story is available in full in the Business Daily e-paper.