A private investor is preparing to put up a multi-million sugar factory in Kanyilaji, Siaya County, which is expected to revive the tottering industry in the area and increase national production.
Once operational, the South Gem Sugar Factory is set to create employment opportunities and spur trade in the surrounding areas.
Surendra Patel, proprietor of Foam Mattress, which is also building a mall in Kisumu, plans to spend Sh800 million on the new plant, according to regulatory filings seen by the Business Daily.
Details on when the construction will start and the funding were, however, scanty and contacts listed on the filings declined to comment on the proposed sugar factory.
The factory is to be built on 4.0469 hectares and according to the report Mr Patel is planning to buy another two hectares in order to provide enough space for the plant whose objectives include the installation of a 1,000 tcd (tonnes of cane per day) vacuum pan-sugar processing mill for production of 2.5 tonnes of sugar.
“The project is expected to assist Kenya to meet the existing sugar deficit of 250,000 tonnes per year, reverse the current trend of continuous importation of sugar into the country thereby draining the country’s foreign exchange and job exportation,” says the filings.
The factory will directly generate over 75 permanent jobs, an unspecified casual employment in addition to other indirect opportunities.
The Kenya Sugar Board (KSB) has licensed 11 millers so far. Privately owned sugar companies include Transmara, Sukari, Kibos and Allied, Butali, Soin and West Kenya while public plants are Nzoia, Muhoroni, Chemilil, Sony and Mumias.
Kwale International Sugar Company, which is 20 per cent owned by Mauritius-based firm Omnicane, is also building a multi-million integrated sugar factory in Kwale.
The public sugar companies are indebted to the tune of Sh34 billion and struggling to survive.
Sugar board chairman Kiptorus Kirior could not give details on the proposed sugar factory but said that investors who are seeking to set up must have done their due diligence to determine that an area is viable for economic production of the commodity.
“My view is that there is still enough potential because we still do not have enough sugar produced in the country,” said Mr Kirior.
The industry is dogged by high production costs and stiff competition from cheap sugar imports as the Common Market for Eastern and Southern Africa safeguards that protect the local industry from regional imports are set to expire further fuelling the competition.
The western Kenya sugar belt is also at the centre a vicious war for raw materials among millers.
Mr Patel expects that once the proposed factory is operational, idle land in the surrounding area, which had been involved in informal production of sugar by-products, mainly jaggery (brown sugar) will be put into productive use boosting the local economy.
“From the history of sugarcane farming and marketing in the area, it was noted that the jaggeries had seriously exploited the farmers, forcefully purchasing their cane and underpaying them,” said the report.
It was also noted that at the time of the jaggeries, there were no weighbridges and cane was weighed by sight.”
The region had four jaggeries, one of them near the proposed project site.
Disclosures in National Environmental Management Authority filings claim that the jaggeries had exploited the community to the point that some of the farmers had uprooted their cane.
Others stopped producing the cash crop and turned to subsistence farming while some decided to sell their cane to far-flung factories like Kibos Sugar.
If the plan is successful, the South Gem Sugar Factory will be located about 6km from Kisumu-Siaya Road at the junction of Wagai, 49km from Mumias Sugar factory, 20km from Uhembo Nyalgugu Jaggery in Siaya Market and 39km to Butere Jaggery.