Diversification, access to private capital can revive sugar mills
Mumias Sugar Company recently asked the Treasury for Sh3.1 billion, a substantive amount and coming on the heels of a combined Sh3 billion pay-out that was handed to the miller since 2013. The cash injection is meant to stave off a near collapse of the giant miller.
The request by Mumias Sugar has triggered reader reactions for the Treasury to extend similar bailouts to Chemelil Sugar Company and other government-controlled sugar factories which are similarly in dire need for massive capital injections.
Reader concern is understandable since these factories are the lifeline for the economies in the Western sugar belt and their collapse would cast financial ruin in these areas.
Any intervention to prevent a near-collapse of the millers is welcome but is routinely asking the Treasury for cash injections indeed sustainable? The brutal reality is that the State-controlled sugar companies and other parastatals have to change how they operate if they are to survive and these parastatals have in the past admitted to this reality.
Processing sugar alone is not enough to save Nzoia, South Nyanza, Chemelil, Muhoroni and Miwani sugar companies. These five sugar companies have to produce a wider variety of products to effectively compete with their peers in Zambia, Sudan, Mauritius and Swaziland.