Get farmer welfare right in Mumias Sugar revival

The Amani National Congress (ANC) party leader Musalia Mudavadi struck the right chord when he demanded that the receivers of Mumias Sugar Company stay transparent in the search for a new investor to run the miller.

Technically, the receivers are under no obligation to listen to noises from political leaders.

The legal position is that the company is in the hands of receivers appointed by its lenders.

Yet the receivers would be making a big mistake if they continued to approach this politically-sensitive assignment of recruiting a new investor as if the cane farmers’ right to know was a secondary matter.

Indeed, Mumias has been the pillar supporting a critical ecosystem that not only catalyses growth of other small businesses, but also provides livelihood options to traders, hoteliers, transporters and rural farmers.

You kill Mumias and you have disrupted the lives and business of hundreds of thousands of citizens in the whole of the former Western and Nyanza provinces.

Secondly, we must not forget that just before the lenders stepped in, billions of shillings of taxpayer funds were pumped into several unsuccessful attempts at reviving the company.

An atmosphere of transparency is critically important because the public must be allowed to interrogate the credentials and capacities of the investors bidding.

The sugar-farming fraternity must know the number of companies bidding and their terms.

We must make it possible for farmers to compare, contrast, and assess what this leasing thing portends to the future of successful cane growing in the region.

It did not escape observers that Mr Mudavadi was raising the alarm in the context of a major public relations offensive by some of the bidders who appear to be bent on projecting the impression that the transaction was a done deal.

The problem is that when you withhold information from the public — as the receiver of Mumias has done — other narratives fill the void.

As it is, the air is full of rumours about how some of the bidders are politically-favoured and how some of the bidders have presented offers proposing to pay for the lease by making small monthly payments to be eventually treated as pre-payments when the investors will be allowed to buy Mumias.

Do we really want to give away the company to a merchant for a song?

Leasing the company is not a bad idea. But the quality of the investor we choose must matter.

We want an investor who will be prepared to make new investment in sugarcane production, rehabilitation of the milling plant, marketing and research and development. Mumias is not in the sorry state it is in merely because of bad management and corruption.

Under capitalisation, lack of investment in new technology has also contributed to the company’s dwindling fortunes. Which is why we must insist on an investor with deep pockets.

They must show us that they have both the money and domain knowledge and experience of successfully running large sugar mills. This is not the space for leveraged buyouts.

This Mumias transaction is taking place against the backdrop of the rise in prominence and profile in this country of private-equity-like businesses who are always scouring the landscape for distressed companies on sight.

Haven’t we seen them behaving as though they have inexhaustible pools of funds ready to pounce even in sectors where they have neither domain knowledge nor experience?

The receivers must conduct serious due diligence on these bidders and ask hard questions.

Are they good taxpayers or are they the types having disputes with the KRA?

How leveraged are they? Or are we dealing with mere fronts for parties whose interest is to close down the milling plant to allow other sugar companies in the neighbourhood to access cane from a bigger zone?

Dominion over the company must come with responsibility for livelihoods of farmers.