Achieve the welfare of farmers in the revival of Mumias Sugar

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Achieve the welfare of farmers in the revival of Mumias Sugar


Entry to Mumias Sugar Company. PHOTO FILE | NMG

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  • An atmosphere of transparency is of crucial importance as the public must be allowed to question the credentials and capabilities of the investors who bid.

National Congress Amani (ANC) party leader Musalia Mudavadi struck a chord when he demanded that Mumias Sugar Company’s receivers remain transparent in the search for a new investor to lead the miller.

Technically, receivers have no obligation to listen to the sounds of political leaders.

The legal position is that the company is in the hands of receivers appointed by its lenders.

Yet the receivers would be making a serious mistake if they continued to approach this politically sensitive mission of recruiting a new investor as if the sugarcane farmers’ right to know was a side issue.

Indeed, Mumias has been the backbone sustaining a critical ecosystem that not only catalyzes the growth of other small businesses, but also provides livelihoods for traders, hoteliers, transporters and rural farmers.

You are killing Mumias and you have turned the lives and affairs of hundreds of thousands of citizens upside down across the former West and Nyanza provinces.

Second, we must not forget that just before the intervention of the lenders, billions of shillings of public funds were injected into several unsuccessful attempts to revive the business.

An atmosphere of transparency is of crucial importance as the public must be allowed to question the credentials and capabilities of the investors who bid.

The sugar fraternity must know the number of candidate companies and their conditions.

We need to allow farmers to compare, contrast and assess what this rental business portends for the future of sugarcane cultivation in the region.

It has not escaped observers that Mr Mudavadi was sounding the alarm bells in a major public relations offensive by some of the bidders who appear to want to give the impression that the deal is done.

The problem is, when you withhold information from the public – as Mumias’ receiver did – other narratives fill the void.

As it stands, the air is full of rumors about how some of the bidders are politically favored and how some of the bidders have submitted offers offering to pay the lease by making small monthly payments that will ultimately be treated as prepayments when investors are allowed to purchase Mumias.

Do we really want to turn the business over to a merchant for a song?

Leasing the business is not a bad idea. But the quality of the investor we choose must matter.

We want an investor who will be ready to make new investments in sugar cane production, mill rehabilitation, marketing and research and development. Mumias is not in the sorry state he is in simply because of mismanagement and corruption.

Under capitalization, the lack of investment in new technologies also contributed to the company’s loss of fortune. That is why we must insist on an investor with rich pockets.

They need to show us that they have both the money and the domain knowledge and experience to successfully run big sugar factories. This is not the space for LBOs.

This Mumias transaction is part of a context of growing power and notoriety in this country of private equity-type companies which are still scouring the landscape in search of companies in difficulty.

Have we not seen them behaving as if they had endless funds ready to spring up even in sectors where they had neither knowledge nor experience in the field?

Receivers must do their due diligence with these bidders and ask tough questions.

Are they good taxpayers or are they the type to have disputes with the KRA?

What is their leverage? Or are we dealing with simple facades for parties whose interest is in shutting down the flour mill to allow other neighborhood sugar companies to access the cane from a larger area?

Domination over the enterprise must go hand in hand with responsibility for the livelihoods of farmers.

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