In the recent time, not so long ago, the Mumias Sugar Limited was involved in not only spending big on political campaigns in 2017, but they also got big payouts with funds reviving the company that same year in 2017. Now two years after the previous elections, the KCB Bank put the company in receivership. This means the funds are insolvent and they struggle to raise enough funds to keep it afloat. That means the owners like Evans Kidero, Amos Wako and Henry Rotrich are struggling to keep it alive.
Surely, they didn’t see this coming. In 2000 and in 2001, the turnover records was set for the company. Since then the privatization and the other measures done, has clearly made the company volatile, as well as the opening of the boarders for more sugar imports. This must have all hurt the turnover, the profits and the margins of the company. Like back in 2008 alone, the company was behind over 50% sugar production in the Republic. That means and shows the importance of Mumias and its operations in Kenya.
Therefore, when it falls as hard it does today. It shows that its left behind. That the business-model, the strategic enterprise isn’t working. Maybe even, that the Jubilee haven’t seen it as an priority post-2017 Elections. We know the importance of it, as it is reported that professor Tom Ojienda has also obtained and solicited illegal funds from this company. That is why we know its vital place in the political sphere and in the republic as whole. The elite has been eating of the company and enjoyed it services, to a point that its crashing.
The millers, the sugar-farmers and the workers are the losers, as the receivership means the bank will runs the operations, until they possibly find a buyer. Someone buying its stake, since the company lacks funds to operate properly. This means, the investors and buyers needs to be loaded, to be able to fill the gaps of financial input, which is clearly needed. That is ironic, knowing how many campaigns, how much the company has gotten favours and how it has high-ranking officials whose had shares in the company.
The income statement on FT says it all: “Year on year Mumias Sugar Company Ltd’s revenues fell -34.06% from 2.09bn to 1.38bn. This along with an increase in the cost of goods sold expense has contributed to a reduction in net income from a loss of 6.77bn to a larger loss of 15.14bn”. This shows how its burning funds and not earning at this point.
We can wonder if the Jubilee will bail on this one or if they are planning ahead for 2022 and want the support of Kakamega. This would be a vital investment, not only in the sugar business, but in the region. As they would save a big business, which has been the biggest producer and miller on the market. This is if the Jubilee cares, but if they are reckless, than they let it go. But then expect them to pay a price. As they are destroying an old institution, business and former state owned enterprise, which is now in the mercy of Kenya Commercial Bank (KCB).
This is not a good look. So my question is, have the Jubilee forgotten this company and its role in society? Or do they think there is someone else’s turn to have that place?
I don’t know, but this is shady, letting a company like this fall and one, which process sugar from the farmers. They will be limbo and need to supply other millers, since this one cannot sustain itself and needs new investments to cover the losses. In the end, the sugar-farmers are the losers. Peace.
MinBane 