JANE MIGUNA - WE DON'T NEED EXPATS IN SUGAR INDUST

[miguna]

We don’t need expatriates in sugar industry

By JANE MIGUNA

The British firm Booker Tate Company came into the Kenya sugar industry shortly after independence with a mandate to provide managerial expertise that would enable the country to efficiently and profitably run the sugar industry.

The Government then signed a Management Contract with the company at a time when Kenya was desperate for industrialisation, seen as the panacea for economic development.

More than 40 years later the Government continues to renew the Management Contract of Booker Tate. Ironically, the company has not managed both Mumias and Sony Sugar companies as expertly as it is expected.

The management contract provided, among other things, for an annual fixed fee of about 430,000 Sterling Pounds to the Chief Executive of the Company. This huge sum is exempt from all taxes. At today's exchange rate, this amounts to about Sh53.7 million.

This large sum is paid to a foreigner tax free to do a job that many Kenyans can do.

Mumias Sugar Company, being the largest miller in the industry parts with about Sh69 million each year in contractual obligations to Booker Tate.

On a regular basis, the company brings many British expatriates to both Mumias Sugar Company and Sony Sugar Company to "manage" operations. Both companies have had expatriates contracted from South Africa to "design" computer programmes for doing simplistic tasks effecting payments from farmers to the cane cutters. The sugar industry has lost huge sums in meeting the travel expenses and upkeep of these expatriates: booking them in five star hotels and taking care of their entertainment in "exotic" resorts. All costs of such extravagance are met at the expense of the sugar cane farmers and workers, who are made to go without adequate pay.

The Management Contract allows profit sharing between the company and the sugar industry, both before and after tax on all produce under special clauses. This does not include the initial 18 per cent profit paid to the company tax free. There are no Kenyan citizens that benefit from these lush funds or largesse. In a way these payments smack of neo colonialism.

Although the company was supposed to help the industry grow and become profitable, all it has done is consistently keep the price of sugar low thereby forcing many small scale farmers to abandon the venture all together. At the Sony Sugar Company, for instance, many farmers end up owing the miller after providing sugar cane to the mill. Lots of farmers make more than 100 per cent loses. The miller ends up charging farmers huge sums of money for services and goods provided such as fertilizers, transportation and the cost of crushing their cane. Those lucky farmers who may have "positive statements" end up waiting for extremely long periods of time before getting their meagre payments. Unlike the government's positive assistance to coffee and tea farmers, we have not heard of any debt relief or significant assistance from the government to sugar cane farmers. Could this be because the most affected sugar cane farmers are from Nyanza and Western provinces; regions seen to be anti-government?

Many major state institutions such as the Central Bank of Kenya are nowadays run by native Kenyans. Why then does Kenya need foreign expatriates to manage its sugar industry?

Kenya has enough expertise, including in the business management, computer technology, engineering and other technical areas, to be able to run all aspects of the sugar industry with minimal, if any, assistance at all. After all, even the so-called expatriates do not do anything when they are in Kenya. It is Kenyans who are working 24 hours daily to keep the industry going but with peanuts as remuneration. To keep inviting expatriates to manage our local sugar industries makes nonsense of the programmes and graduates of our polytechnics and universities.

It is time the company's perpetual contract is checked. The sugar industry is in deep crisis, mainly due to government neglect, interference and corruption. There is no need for Kenya to keep on importing sugar at the current high levels when our local sugar industry can adequately serve the present needs of the country. Besides, both Nyanza and Western Provinces remain poor because of the perpetual neglect and lack of government support.

(The writer is a former employee of Sony Sugar Company, now living and working in Toronto, Canada)

[kamalet]

This must have been written 5 years ago when some of the assertions were correct.

If my recollection serves me right the Booker Tate agreement with Mumias Sugar was terminated a couple of years ago. I believe that it was following the non-renewal of their contract that Eavns Kidero was appointed MD of Mumias.

Last Friday, Mumias announced a Shs. 1 billion half year profit.

......interesting that we always introduce political angles to everything! The last time Kibaki was in Nyanza, some Luo politicians were falling over themselves congratulating the government for ensuring that the outstanding payments to farmers had been paid! Perhaps they could have consulted this "sugar expert" now residing in Canada before praising a government totally removed from the sugar farmers of Nyanza and western Kenya who are 'viewed as anti-government'! Laughable craptrap!!

[miguna]

Kamau - maybe this may shed some light for you. But I'll be giving you even more startling revelations.... Maybe I don'r know how to count years. But 5 years my friend? No! Please check their website, which glorifies their Kenyan ventures...
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Posted Thursday 2 October 2003

Kenya farmers suffer as US$60 million sugar factory stalls
10/2/2003 8:24:30 AM (GMT +2)

BUSIA, Kenya — The promise of riches for 60-year-old sugar farmer Japheth Wawire has dissolved into a tale of anger and poverty.

Like thousands of other small-scale growers in the town of Busia on the Kenya-Uganda border, two years ago he ploughed his two-hectare piece of land to plant his first sugar cane, energised by plans to build a new sugar mill near his home by 2003. The factory has failed to materialise.

"You can die here even before you see the sweetness of your sweat," Wawire said. "I planted sugar to sell to the factory, now the cane is about to mature and there is no factory."

Wawire says the variety of sugar cane he grows takes up to two years to mature, and he first planted it in 2001.

His only hope now is that it will be sent to another factory for milling, but that will mean extra transport costs before he can recover the costs of his crop.

Wawire is one of at least 8 000 farmers who were contracted by the managers of the proposed factory, Busia Sugar Company (BSC), to grow cane.

BSC, which is managed by the British agro-management firm Booker Tate, was set up in 1981.

Its managers say the factory is no longer viable because of competition from cheap sugar imports.

The irony for Kenya is that the US$60 million factory could help plug its annual sugar deficit, said CEO Ray Varle.

Potential investors see no point in the venture, saying they will not make a return because BSC cannot produce sugar at a price that can rival cheap imports.

"Our production would plug the sugar deficit if Busia Sugar Company (BSC) was operational," said Varle near the proposed site of the plant, 500 km west of Nairobi.

"This factory was supposed to be on stream this year, producing 110 000 tonnes of sugar annually," Varle said.

"But no one puts money unless there is a good return on it."

Kenya’s output is about 400 000 tonnes and Kenyan sugar authorities say consumption stands at about 600 000 tonnes. Varle says consumption is really only about 500 000 tonnes because Kenyans have grown poorer and consume less sugar.

He said the 200 000 tonnes or more that Kenya imports annually to meet its estimated deficit was much higher than its needs. He said the actual deficit was about 100 000 tonnes.

"Sugar is a very good measure of economic prosperity," he added.

Kenya’s economy barely grew at 1.1 percent last year.

Varle said Kenyan sugar imports were from the surplus of global sugar needs and were therefore sold at very low prices.

"We are unlikely to see BSC up and running unless the cheap imports are curbed," he said.

"It’s a big shame that the factory has failed," said Andrew Otieno, CEO at sugar regulator Kenya Sugar Board (KSB).

"I have demanded a concrete action plan from Booker Tate by December or else we start looking for a new partner."

Otieno said the KSB had advanced Booker Tate 301 million Kenya shillings (US$3.92 million) to start up the factory. Kenya, Booker Tate and a private investment company each control one-third of the stalled shareholding, he said.

Although cheap sugar imports had destabilised Kenyan sugar millers, it was up to them to find ways of surviving, he said.

"I have told them that it is a lame excuse to blame sugar imports for the failure to start up the factory."

The official estimate of a 200 000 tonne annual sugar shortfall was real, he said, noting that it comprised 111 000 tonnes of white sugar for industrial use which Kenya does not have the ability to produce at all.

Otieno admitted weak verification of sugar imports by the authorities and said traders’ greed had made life difficult for local millers.

"Some unscrupulous traders even under-declare their import quantities, trying to import more than we need," he said.

"We’re trying to improve surveillance of these imports." — Reuter