Kenya's Sugar Sector Rebounds After Seven-Year Boom and Bust Cycle

Kenya’s sugar sector is showing signs of recovery following a Ksh117 billion state debt write-off and the 30-year leasing of four loss-making public millers to private investors.

• Fresh data from the Kenya National Bureau of Statistics (KNBS) and the Kenya Sugar Board shows that cumulative sugarcane deliveries reached 4.93 million metric tonnes (MT) in the first half of 2026.
• The uptick culminated in a record 998,010 MT delivered in June 2026 alone, the highest single-month output recorded in seven years.
• The operational shift follows the government's decision last year to concession Nzoia, Chemilil, Sony, and Muhoroni sugar companies to private millers in a bid to halt years of state bailouts and mismanagement.

Under the 30-year lease agreements, West Kenya Sugar Company has taken over operations at Nzoia Sugar Company, while Kibos Sugar & Allied Industries Limited assumes management of Chemilil Sugar Company. Sony Sugar Company has been handed over to Busia Sugar Industry Ltd, with Muhoroni Sugar Company going to West Valley Sugar Company.

The handover comes after taxpayers repeatedly funded bailouts for the struggling factories. In 2024, the government absorbed over KSh 117 billion in historical debts accrued by the state millers and injected an additional KSh 2.5 billion to clear outstanding arrears owed to farmers and factory workers.

To preserve state ownership, all underlying assets, including land, will remain national property. Lease fees collected by the Kenya Sugar Board are expected to be directed back into local cane development and surrounding communities.

The structural changes come after years of extreme supply volatility in the local market.

Deliveries had grown from 6.89 million MT in 2020 to peak at 8.59 million MT in 2022. However, a severe raw material deficit forced the Agriculture and Food Authority (AFA) to enforce a five-month milling suspension in mid-2023, causing annual deliveries to collapse by 36.1% to 5.48 million MT.

Although output bounced back to 9.33 million MT in 2024 as mature cane came online, renewed shortages led to another 24.5% contraction in 2025 (7.04 million MT), forcing temporary factory shutdowns across Western Kenya.