Government Leases Four State-Owned Sugar Mills to Private Millers
May 10, 2025 — Nairobi, Kenya
In a strategic move to revitalize Kenya’s ailing sugar industry, the government has successfully leased four state-owned sugar factories to private millers. The mills — Nzoia, Chemelil, Sony, and Muhoroni — which have long struggled with inefficiency, poor management, and mounting debts, are now set to be operated by private companies under a lease agreement aimed at boosting production and stabilizing the sector.
The deal, finalized this week by the Ministry of Agriculture, marks a significant step in the government’s ongoing efforts to reform the sugar industry, which has faced challenges such as outdated machinery, delayed payments to farmers, and competition from cheap imports. The government’s move follows a series of failed attempts at reviving the sector through public management and restructuring programs.
“This is a historic moment for Kenya’s sugar industry,” said Agriculture Cabinet Secretary Mithika Linturi, during the announcement. “By involving private investors, we are injecting the much-needed capital, expertise, and efficiency into the sector, with the goal of increasing local sugar production and reducing our reliance on imports.”
Under the leasing arrangement, private millers will assume operational control of the factories while paying a fixed lease fee to the government. The agreement also includes provisions for upgrading the mills’ infrastructure, including modernizing machinery and enhancing processing capacity. In return, the private companies are expected to prioritize the welfare of sugarcane farmers, ensuring timely payment and supporting sustainable farming practices.
The four mills have long been plagued by inefficiency, with Nzoia and Chemelil particularly struggling in recent years. The sugar mills’ debts have left farmers, who depend on the factories for payment, in financial hardship. These issues, coupled with an influx of imported sugar, have caused a significant decline in the sector’s competitiveness.
The leasing arrangement has been welcomed by industry stakeholders, including the Kenya Sugarcane Growers Association (KESGA), which has expressed optimism that the new management model will lead to increased production and better compensation for farmers.
“We have been advocating for a model where private investors take over the management of these mills, and now we have seen this come to fruition,” said KESGA Chairman, Julius Mwai. “This is a good step towards bringing stability to the sugar industry and ensuring that our farmers are not left behind.”
However, the transition to private management comes with its challenges. Critics of the lease model argue that it could lead to a loss of government control over a key sector, potentially allowing private companies to prioritize profit over farmer welfare. Others are concerned that unless farmers are properly integrated into the new model, the benefits could be skewed in favor of millers rather than the communities that rely on the sugar industry for their livelihoods.
The Kenyan government has assured the public that it will closely monitor the implementation of the lease agreements, with strict oversight mechanisms in place to ensure that the rights of farmers and workers are protected. Additionally, the government plans to encourage new investments in the sugar sector by creating a favorable policy environment and addressing issues such as land tenure and water access for sugarcane farming.
As Kenya seeks to revitalize its sugar industry, the success of this leasing model could serve as a blueprint for other struggling sectors, offering a potential solution to balancing public interests with private sector efficiency.