Kenyan tycoon Jaswant Rai, a dominant figure in the country’s sugar industry, has won a 30-year lease to operate the struggling state-owned Nzoia Sugar Factory.
- •Under the terms of the deal, over KSh 200 million owed to farmers will be cleared before the current financial year ends and all employees will be retained for at least one year.
- •According to the factory’s board chairman, Alfred Khang’ati, Rai will officially take over operations of the Bungoma-based miller within the coming week.
- •While challenges remain — especially balancing private interests with public good — the privatization of Nzoia Sugar could provide a blueprint for broader reforms of state-owned enterprise sectors.
Despite the optimism, the Nzoia lease has not been without controversy as legal challenges have already emerged, with some stakeholders and politicians questioning the transparency of the leasing process.
Concerns also abound about the possible monopolization of the sugar market by Rai’s companies and the exclusion of other interested investors. Rai other sugar companies include West Kenya Sugar, Sukari Industries, and Olepito. He is also involved or invested in Menengai Oil, Timsales, Tulip Properties, RaiPly, and Webuye PanPaper.
Nzoia Sugar, established in 1975 and majority (98%) owned by the government, operates a 3, 600 hectare nucleus cane estate. It also serves 23, 500 hectares under cane in its outgrown zone. Fives Cail owns 1.13% of the company while the Industrial Development Bank holds 0.93%, according to a 2021 audit by the Office of the Auditor-General.
On the whole, the move fits within the government’s broader privatisation agenda, which seeks to offload struggling state-owned enterprises and encourage private sector participation.
While the agenda has stalled somewhat, the Nzoia lease will be seen as a test case for the process of revitalising critical sectors such as agriculture and manufacturing, which have suffered due to mismanagement, debt, and declining productivity.
