From Mail & Guardian

Kenya will offer five state-owned sugar companies for sale to private investors over the next year after writing off $611 million of debt, the country’s Privatisation Commission has said.

The government plans to sell its stakes in Nzoia Sugar Co., South Nyanza Sugar Co., Chemelil Sugar Co., Muhoroni Sugar Co. and Miwani Sugar Co. to make the industry “more viable,” the commission said in a May 15 statement.

The companies accounted for about 10% of the 592,100 metric tonnes of sugar produced in Kenya last year, according to Kestrel Capital (East Africa) Ltd., a Nairobi-based brokerage.

“Government reached the decision of bailing them out completely so that the firms would look attractive to investors,” Henry Obwocha, the chairman of the commission, said in an interview on May 18 in the capital, Nairobi.

Kenya is trying to overhaul its sugar industry, which the Food and Agriculture Organisation says is beset by problems including dilapidated factories, poor governance, insufficient funding and inadequate research.

It means that domestic production costs can be as high as $900 per ton of refined sugar, partly because the majority of farmers are smallholders so the industry does not benefit from economies of scale.

By contrast, costs can be as little as $300 per ton in countries in the 19-nation Common Market for Eastern and Southern Africa (COMESA) bloc, according to Kenya’s state-run Sugar Directorate.

But the problems are not unique to Kenya – Africa’s sugar industry is going through tough times as a global sugar glut has set prices careening downward to levels not seen since 2010, much like what has happened to crude oil in the global markets.

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