Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has revealed the terms guiding the long-term leasing of Kenya’s state-owned sugar mills, saying the agreements are designed to protect farmers, safeguard public land, and revive the struggling sector.
Appearing before a parliamentary committee on Wednesday, December 3, 2024, Kagwe explained the details of the 30-year leases under which four sugar companies South Nyanza, Nzoia, Chemelil and Muhoroni were transferred to private operators earlier this year.
The mills were officially handed over on May 10, 2025. Busia Sugar Industry Ltd took over Sony Sugar; West Kenya Sugar Company Ltd assumed operations at Nzoia; Kibos Sugar & Allied Industries Ltd took charge of Chemelil; while West Valley Sugar Company Ltd took on Muhoroni.
According to Kagwe, the companies will pay annual rental fees of KSh 40,000 per hectare for Sony, Chemelil and Muhoroni, and KSh 45,000 per hectare for Nzoia. In addition, the lessees will remit concession fees of KSh 4,000 for every tonne of sugar produced and KSh 3,000 per tonne of molasses.
A goodwill payment equivalent to one year’s rent was also required upfront.
“The lessee shall not assign, transfer, pledge or make any other disposition of the lease or any part thereof,” Kagwe told MPs, emphasizing that the agreements were intentionally tight to prevent misuse of public assets.
Beyond the financial commitments, the private firms are expected to make sizable investments in cane development, mill modernization and new technologies aimed at improving efficiency. They will also be required to diversify into cogeneration, bioethanol and other sugar-related products part of a broader strategy to stabilise the sector and create more income streams.
Kagwe noted that all investments made during the lease period will revert to the government at the end of the 30 years.
“The nucleus land shall only be used for cane development and cannot be used as collateral by the lessee,” he added, underscoring the government’s intent to protect strategic agricultural land.
He also said that lease proceeds would directly benefit communities through bonuses paid to farmers, ensuring the financial gains are felt at the grassroots.
While land, buildings, plants and machinery were included in the leases, motor vehicles and livestock were excluded from the transfer.
Kagwe’s briefing comes amid growing public scrutiny over how the leasing model will impact jobs, cane farmers and long-term sustainability in the sugar belt.
