A strategic investor, farmers and employees have been given the chance to buy stakes in state-owned sugar factories through the Privatisation Commission. This follows approval on April 21, 2015 of Privatisation proposals presented to the National Assembly’s Finance, Planning and Trade Committee by National Treasury Cabinet Secretary Mr. Henry Rotich.
Privatisation Commission Chairman Mr. Henry Obwocha also said in a statement that prior to implementation, further consultations on the privatization will be held with county governments, sugar farmers and other stakeholders. The transaction process is expected to be complete between nine to 12 months.
The state owned millers to be privatized include Nzoia Sugar Company, South Nyanza Sugar Company, Chemelil Sugar, Muhoroni Sugar Company and Miwani Sugar Company (both in receivership).
The move aims at raising cash for rehabilitation of the millers and make them more competitive and efficient. The millers are in dire need of modernisation and to survive competition after the entry of other sugar producers and an impending end to sugar import limits from the common Market for Eastern and Southern Africa (COMESA) trade block after the end of one-year extension given early this year.
The privatisation strategy involves sale of new shares comprising 51 percent shareholding of each of the sugar firms through a competitive process to a strategic investor. There will be a sale of 24 percent of the remaining shares to out growers and employees through investment trusts to be formed for that purpose,” said Mr. Obwocha.
He added: “The government will retain 25 percent stake in the sugar millers which it may decide to sell later through an Initial Public Offer (IPO) or any other method. In this future sale, six percent shareholding will be reserved for farmers depending on their ability and needs of the factory.”