Government Dismisses Reports of Firing 5,000 Sugar Workers

Kenya’s sugar sector, one of the most politically sensitive and economically significant agricultural industries, is once again at the center of national debate after the government dismissed reports claiming that over 5,000 sugar workers were facing mass termination. The clarification came as the state intensified leasing agreements for major public sugar mills to private investors, a move officials describe as a turning point aimed at saving jobs, reviving production, and modernizing operations after years of heavy debt and low efficiency. The government maintains that the current reforms are structured to protect employment, not destroy it, with at least 80 percent of the workforce in state-owned mills expected to be retained by incoming operators under the new model.

According to official figures, Kenya’s sugar industry directly employs about 47,000 people and supports an estimated 250,000 outgrower farmers whose livelihoods depend on cane farming and its associated value chains. These numbers represent one of the country’s largest agro-industrial workforces, and any threat to employment resonates far beyond the factory gates. Government officials have repeatedly emphasized that the aim of the current leasing process is to protect this network by placing mill operations in the hands of experienced private millers capable of boosting efficiency, paying farmers promptly, and reducing public sector losses. The new investors are required to maintain continuity of operations, preserve most existing jobs, and modernize plant and machinery to achieve higher recovery rates and reduced waste.

The numbers underline why this reform is so significant. National sugar production currently averages just under 800,000 tonnes annually, while domestic demand exceeds 1.1 million tonnes. The shortfall has been covered by imports from COMESA countries, often at the expense of local producers. Government projections suggest that once the leased mills, Nzoia, Chemelil, Muhoroni, and Sony, are fully operational, national production could rise to about 1.6 million tonnes per year. That would not only close the supply deficit but could transform Kenya into a potential net exporter within East Africa. In economic terms, this could save the country more than KSh25 billion annually in foreign exchange that currently goes to import bills.

At the heart of the restructuring is an effort to end the cycle of inefficiency that has kept public sugar mills dependent on subsidies. For decades, these factories have operated at less than half their installed capacities, burdened by debt estimated at more than KSh100 billion combined. Poor management, outdated equipment, and delayed farmer payments compounded the problem. Leasing them to private millers for 30-year periods is intended to ensure long-term capital investment and professional management. Each of the four operating leases assigns a specific investor: Nzoia Sugar under West Kenya Sugar Company, Chemelil under Kibos Sugar and Allied Industries, Sony under Busia Sugar Industry, and Muhoroni under West Valley Sugar Company. These investors have committed to modernization programs, including new milling technology and better cane transport logistics.

Concerns about job losses, however, remain at the center of public discussion. The figure of 5,000 workers became a flashpoint when redundancy notices were issued to staff as part of the handover process. Unions argued that the notices implied mass layoffs. The government clarified that these notices were procedural, meant to align employment contracts with the new operational structures, not to send thousands home. Officials insist that 80 percent of existing employees, roughly four out of every five, will continue working under the private operators. The remaining 20 percent comprise mostly staff nearing retirement age or those previously retained due to pending retirement packages. Their exit, government representatives note, will be managed gradually and lawfully once benefits are fully settled.

The data on industry employment reinforce why a measured transition matters. The 47,211 wage employees in sugar account for roughly one in ten jobs in Kenya’s formal agricultural processing sector. A sharp reduction in that number would have ripple effects through local economies in western Kenya, particularly in Bungoma, Kisumu, Nyando, and Migori counties, where sugar factories are often the main employers. Studies show that for every direct sugar job, at least three indirect jobs exist in transport, trade, and farm supply chains. Retaining 80 percent of mill workers, therefore, helps safeguard nearly 150,000 livelihoods linked to the formal sugar value chain alone.

The performance data since leasing began provide early indications of recovery. Weekly cane crushing at operational mills has increased from around 7,000 tonnes to 11,000 tonnes as plants resume consistent operations. This is a meaningful rise of over 50 percent, signalling that private management is already boosting throughput. Production trends for the first half of 2025 had shown a 15.8 percent decline in national output due to factory breakdowns and delayed cane supply, but the reopening of Muhoroni and Sony mills under new operators has reversed the trend. Mill managers now report improved maintenance cycles and better cane recovery ratios, both key indicators of operational efficiency.

Payment systems for farmers have also shifted from the previous monthly model to weekly disbursements, shortening the cash-flow gap that previously pushed farmers into debt. Early results suggest that cane deliveries are increasing as farmers regain confidence in timely payment. This shift may help stabilize cane supply, which has long been erratic due to delayed compensation. The success of this model could eventually influence payment structures in other cash crop sectors.

From a fiscal standpoint, the State expects that divesting daily operations while retaining ownership of the core assets will relieve the public of the high recurrent costs that previously drained the exchequer. The government will continue to earn concession fees and taxes from the investors, who will assume operational and financial responsibility for production. If projections hold, Kenya’s sugar sector could move from a consistent loss-maker to a revenue contributor. The expected rise in national output to 1.6 million tonnes would translate into a gross market value exceeding KSh160 billion annually at current retail prices, more than double current value levels.

Nonetheless, labor unions remain watchful. They argue that while the commitment to retain 80 per cent of workers is welcome, it must be backed by legally binding agreements under the existing Collective Bargaining Arrangements. They have demanded settlement of all salary and allowance arrears, reported at more than KSh5 billion, before any changes in employment status take effect. Officials have confirmed that payments are being scheduled in phases and that no worker will be left uncompensated. The government also insists that all redundancy or retirement cases will follow proper legal channels and that no one will be unfairly dismissed.

The reform effort carries broader implications for Kenya’s industrial policy. A successful transition in the sugar sector would provide a model for how to rehabilitate other struggling state corporations through private-sector partnerships while maintaining worker protection and regional equity. It also feeds into the government’s wider agricultural transformation plan, which seeks to raise agro-industrial productivity, increase exports, and cut import dependence. The sector’s transformation, if achieved, could contribute up to one percentage point to annual GDP growth, driven by value-added processing and job creation.

Yet, numbers alone do not tell the whole story. The human dimension of this transition, workers anxious about their futures, unions pushing for transparency, and farmers adjusting to new payment systems, will determine whether the reforms succeed politically as well as economically. Employment retention targets will need continuous monitoring to ensure that promises translate into real jobs on the ground. At the same time, production metrics will need independent verification to confirm that the projected doubling of output is sustained beyond the first phase of private operation.

The challenge of balancing efficiency with equity remains central. In the short term, the focus will be on ensuring that redundancy and retirement benefits are processed without delay. In the medium term, success will be measured by how quickly the mills can modernize, how much cane they can process per week, and how consistently they can pay both workers and farmers. Over the long term, the data that matter most will be sugar self-sufficiency ratios, export volumes, and profitability trends.

As the October transition deadlines approach, the numbers suggest cautious optimism. Four of the five targeted mills have active lease agreements, two have resumed operations, and productivity indicators are already improving. Job retention levels remain high, and weekly farmer payments have been reinstated. For a sector long associated with losses, unpaid dues, and idle machinery, these figures represent measurable progress. The reforms may not be perfect, and challenges of debt settlement, labor relations, and governance will persist. But if the trend lines hold, if production doubles, arrears are cleared, and workers stay on payroll, the current policy could mark the most significant sugar sector recovery in decades.

Ultimately, Kenya’s sugar story is one of numbers, policy choices, and human resilience. The government’s dismissal of mass layoff claims underscores a determination to reshape the industry without triggering social disruption. Whether this promise holds will be visible not in statements but in employment data, wage payments, and factory output recorded over the coming year. For now, the balance of figures points toward gradual recovery rather than collapse, a sign that the sector, once written off as unsalvageable, may finally be grinding its way back to profitability, one tonne of cane at a time.