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State to write off debts, inject funds into sugar sector

Writing off debts and injecting capital into the sugar industry are some of the key measures the government has resolved to undertake to address the challenges facing the sector.

The industry is currently undergoing a strain with allegations that a considerable amount of sugar either improperly or illegally imported into the country is laced with harmful chemicals.

Interior CS Fred Matiang’i on Friday told Parliament that tests are yet to confirm it but some of the sugar may contain copper, lead and mercury.

Read: Sugar probe: I can’t confirm sugar has mercury, Matiang’i tells MPs

The alarming revelations seemingly drove industry players into consultations aimed at finding a lasting solution to the problem.

The meeting held on Thursday and Friday at the Windsor hotel, Nairobi, was attended by governors, MPs, the Privatization Commission and leaders from sugar growing regions.

They identified ten key challenges that may have led to the current crisis in the sugar industry.

These include high debts sugar milling companies owe farmers, which have in turn led to low cane supply and encouraged cane poaching.

Aging equipment in sugar milling factories, lack of sector funding, poor corporate governance and staff salary arrears were the other challenges singled out.

Excessive sugar importation and lack of industry regulation also stood out as the other key shortcomings bedeviling the sugar industry.

Apart from injecting funds into the industry and writing off debts sugar companies owe the government, the meeting also resolved that sugar importation be restricted to the COMESA Free Trade Agreement.

The COMESA FTA was launched in October 2000 to provide duty free and quota free market access to member States on COMESA originating products.

Under the Rules of Origin, goods that have undergone some processing or are wholly produced within the region get preferential tariff treatment when crossing the border.

This will serve to reduce the importation of contraband and illegal sugar into the country as importers seek to evade paying taxes.

Read: KRA, Kebs officials face arrest over Sh1.8 billion contraband sugar

Also read: Western miller boss arrested in probe of contraband sugar

The meeting, which was chaired by Agriculture CS Mwangi Kiunjuri, also resolved that the national and county governments will intervene and resuscitate the ailing Mumias Sugar Company.

Chairman of the Council of Governors committee on Agriculture Okoth Obado and the chairman of the Lake Region Economic Bloc Wycliffe Oparanya attended the meeting.

Also present was Devolution CS Eugene Wamalwa and chairman of the Privatization Commission Henry Obwocha.

“Following these high consultative meeting, the leaders have resolved to execute these resolutions and recommendations giving us confidence that the sector will serve farmers and other stakeholders more effectively,” the leaders said in a joint statement.

Other resolutions arrived at was that the sugar Arbitration Tribunal should be re-established and licensing in the sugar industry be done through consultation and concurrence of both national and county governments.

For purposes of funding research work, cane and infrastructure development, it was agreed that the Sugar Development Levy should be re-introduced.

On their part, public sugar companies will have to seek strategic partners for capital injection.

Towards this end, the national and county governments and the Privatization Commission will collaborate in developing a roadmap for the resuscitation of the companies.

This will include the identification of transaction advisors and strategic partners.

The ministry of Agriculture will on its part provide a leadership role in bringing together the relevant government departments and agencies to address the financial requirements of the public sugar companies.

This will see the ministry carry out a forensic audit of public mills as a way of giving confidence to potential strategic partners.

The leaders agreed that a ten member committee with representation from key State and sector departments be formed to steer the implementation of the resolutions.

Membership of the committee will be drawn from the Attorney General’s office, milling companies, the Lake Region Economic Bloc and the Intergovernmental Budget and Economic Council (IBEC).

Others are the Ministry of Agriculture, CoG (Agriculture Committee), Treasury and the Privatization Commission.

“The committee may co-opt any other stakeholders as may be required,” the leaders said.

They did not, however, give a timeline on when the resolutions are expected to bear fruits.

All News | The Star, Kenya

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