Nairobi: The government has reached an agreement with sugarcane farmers and sugar factory workers' unions to address outstanding cane delivery and salary arrears owed to these groups. This move is part of a broader strategy as the government plans to lease four sugar factories-Nzoia, Chemilil, Sony, and Muhoroni-to private millers.
According to Kenya News Agency, the Cabinet Secretary for Agriculture and Livestock, Mutahi Kagwe, announced that the government will clear the arrears owed to both farmers and workers before the transition of the factories to private entities. As part of the agreement, the government has committed to paying farmers Sh500 million in July for cane deliveries to settle the outstanding dues.
Last year, the government disbursed over Sh1.7 billion to sugarcane farmers to clear previous arrears. However, since then, an additional Sh500 million has accrued for cane delivered by farmers. Similarly, the government paid over Sh600 million to factory workers last year from a total debt of Sh5.3 billion, leaving Sh4.7 billion outstanding. This amount has since increased to an estimated Sh5.6 billion.
Kagwe stated that the government has negotiated an agreement with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW) to protect the interests of sugar factory workers. KUSPAW has signed a Memorandum of Understanding (MOU) wherein the government commits to a phased payment schedule. Under this schedule, Sh1 billion will be paid to workers upon the takeover, with Sh600 million allocated to settle part of the staff arrears and Sh400 million for salaries starting in May 2025.
Additionally, Sh1.5 billion will be released in July for the payment of staff salaries and arrears. The Ministry will remain accountable for all unpaid salary arrears, pension contributions, and statutory deductions up until the lease handover date.
The agreement also outlines a twelve-month transition period during which the four lessees will assess the workforce needs and determine criteria for retaining current employees.