Mumias Sugar made about 42 percent of Kenya’s sugar. It was placed under receivership in 2019. What the record shows.
Founded in 1971 with 50,000 outgrower farmers, Mumias Sugar produced sugar, electricity and ethanol. Falling output and an audit led to a decade of trouble.
Mumias Sugar Company, headquartered in Mumias in Kakamega County, was Kenya’s largest sugar maker, producing about 250,000 tonnes a year, around 42 percent of national output. It was founded in 1971 to provide cash income to farmers, create jobs, curb rural-urban migration and reduce Kenya’s dependence on imported sugar. Over 50,000 registered outgrowers supplied cane from more than 400 square kilometres, and the company also generated 34 megawatts of electricity and made ethanol and distilled water.
A downturn
From 2012 sugar output and profits fell. A forensic audit by KPMG found procedural and financial irregularities that had not been reported to the board, leading to a loss of more than KSh1 billion. Fifty-two top managers were dismissed, and the company asked the government for a KSh2.3 billion bailout, of which KSh500 million had been advanced by February 2015.
On 24 September 2019 Kenya Commercial Bank, which was owed KSh545 million, placed the company under receivership.
Lessons
- Reporting lines matter. The board needs accurate information, early, from the people running operations.
- A business with many farmer-suppliers carries a big social role. When it falters, tens of thousands of households feel it.
- Diversifying income helped, but it did not replace the core. Power and ethanol were small next to sugar.