Two Parliamentary Committees have held  week-long stakeholder engagement to receive submissions regarding the revival and commercialization of State-Owned Sugar Companies.

This follows a directive from the Speaker of the National Assembly, Hon. Dr. Moses Wetang'ula and a proposal by the Leader of the Majority Party, Hon. Kimani Ichung’wa, MGH, MP on the National Treasury Memorandum on Action Plans to Revive and Commercialize the State-Owned Sugar Companies, which was tabled in the House on August 22, 2023.

MPs and MCAs from the Western and Nyanza region where the sugar companies are located, farmers’ representatives, Management of state-owned sugar companies, Kenya Revenue Authority, The National Treasury and Ministry of Agriculture and Livestock Development made submissions in review of the Treasury Memorandum on the Action Plan to Revive and Commercialize State Owned Sugar Companies.

“The financial woes of these state-owned sugar companies are staggering, with a collective debt reaching a staggering Kshs. 128.06 Billion as of June 30, 2023. The debt has been a major impediment to the industry's growth and sustainability, “said Molo MP, Hon. Kuria Kimani. 

Under the leadership of Hon. Dr. John Mutunga and Hon. Kuria Kimani, legislators converged in Kisumu to engage with stakeholders on the reviving and commercializing state-owned sugar companies.

Regarding land, ownership, cane farmers from sugar cane growing areas support land leasing. However, they urge for proper frameworks need to be developed alongside community engagement. 

The proposals to lease community-owned land further gained traction with Kisumu and Migori County, MCAs, arguing that this approach could help boost factories and incentivize farmers and investors. 

However, legislators questioned Mr. Lawrence Kibet Director General, Public Investments, National Treasury, regarding details of the proposed land leasing model.

"This leasing model you have referred to in the Memorandum have you prepared one? We need more information on these proposed land leases," asked Molo MP and Chair Finance and National Planning, Hon. Kimani Kuria.

Meanwhile, Hon. John Makali (Kanduyi), Hon. James K’Oyoo (Muhoroni), Hon. Emannel Wangwe (Navakholo), Hon. John Waluke (Sirisia) and Hon. Walter Owino (Awendo) support writing off debt and tax penalties citing a clean slate will provide an opportunity for the companies to commercialize without debt.

Notably, farmers representatives and the Kenya Sugar Plantation Union and Allied Workers Union demanding the payment of arrears owed to them. Sentiments echoed by Leaders from the Western Kenya and Nyanza Sugar belt.

 "Employees at Chemelil Sugar Company have gone without their rightful salaries for 53 months, while Nzoia workers have endured 15 months without pay, and Sony employees being owed 19 months of outstanding salaries. Even retirees have been forced into retirement without receiving their due payments," said Mr. Lincoln Aveza a representative of the Kenya Sugar Plantation Union and Allied Workers Union while making his submissions.

Critically, the Joint Committee acknowledged that Treasury's action plan has does not include provisions for paying farmers' arrears and workers' salaries. Stakeholders argue that without addressing these debts, the commercialization effort may falter.

Regarding tax waivers, the Kenya Revenue Authority, Commissioner General, Mr. Humphery Mulongo, informed Lawmakers’ that the Kenya Revenue Authority no longer having the authority to write off tax debts as a result of the enactment of Finance Act 2023 that included amendments to tax write-off provisions.  

“The Finance Act, 2023 introduced a Tax Amnesty on Interest and Penalties for periods up to December 31, 2022, running from September 1, 2023, to June 30, 2024 which allows taxpayers to take advantage of this amnesty by settling their outstanding principal taxes accrued up to December 2022, after which penalties and interest for those periods will be waived” added Commissioner General, Mr. Humphrey Mulongo.

Documents submitted by the Kenya Revenue Authority also reveal that Sony, Chemili, Muhoroni, Nzoia and Miwani Sugar Companies owe Kshs 16.37B in taxes, penalties and interest.

Regarding zoning, a majority of stakeholders had mixed views on the matter, with some of the State-owned millers in support while farmers opposed. 

The Ministry of Agriculture through the Mr. Kello Harsama, PS State Department on Crops reiterated support for zoning in sugar-growing areas, citing best practices in countries like Brazil and Thailand.

On cane research, Dr. Betty Mulianga, Ag. Institute Director, Sugar Research Institute called on the Joint Committee to allocate more funds to the Institute to further cane research and cane seed development. This was echoed by other stakeholders.

The Joint Committee assured stakeholders of their commitment to the revival and commercialization of state-owned sugar companies. Members are expected to prepare report that will be tabled at a Special Sitting of the National Assembly on September 14th 2023.