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CIRCUS AT MUMIAS SUGAR COMPANY IS DOING MORE HARM THAN GOOD TO THE ECONOMY OF WESTERN KENYA

MUMIAS SUGAR COMPANY – A PALE SHADOW OF ITS FORMER SELF (PICTURES BY ISAAC WALE)

In my attempts to touch base with my Christianity while poring through the canonical compass of my religious faith, I chanced upon the Book of Matthews 25: 13 – 30. While studying the course of Christian Religious Education over a decade of study, we referred to this tale as the Parable of the Talents. The account starts with an exhortation to stay alert for none knows the day nor the hour of the Lord’s return. A wealthy entrepreneur who was setting off on a journey summoned his slaves and entrusted part of his estate to them. To the first he dished out 5 Talents of Silver, the next he gave 2 and the third he bequeathed 1 Talent each according to their capabilities. After the customary farewell with each, he departed. The one entrusted with five talents right away put his mercantile acumen into action and in no time doubled his talents to 10. The one who was given two in similar fashion worked his entrepreneurial bone to double his capital investment. However, there was a divergence in strategy from the last one entrusted with a solitary talent. He took one long look at it, dug a hole in the ground and put his talent out of sight of any potential grabbers of the same. As with all journeys, they always end with the traveler’s predictable return to his point of origin. The Master was back and in no time took the initiative to settle accounts with each of his employees. The one entrusted with five came to his master, ebullient of voice and indeed chomping at the bit over his Boss’ return. He could not gird his enthusiasm over the fact that he was entrusted with five talents and had worked his magic to double the investment. The equally joyous master offered a glowing panegyric of this investment virtuoso and his fidelity to whatever little he was given to oversee. He was in the future to be entrusted with more and was welcomed by his master into his reveling. Hot on the trail of the first, the second soon sauntered in with equal excitement about his piece of business that had also enabled him to double his investment. “Good job, you good and loyal servant. You have been faithful with a few and have earned the right to be set in charge of much more. Enter the joy of my palace,” averred the Master. After a long wait, the one who received a singularity of talent made the beeline for the palace on getting wind of his master’s return. He wore a pervasive scowl and soon enough went into defensive mode. “I’ve always been aware of your character as a hard man, reaping where you sowed not, raking harvest where you scattered no seed. Consequently, I was apprehensive of your well-worn fiery comportment and so went forth to hide your talent in a bunker I dug under my floor,” posited the slave. You would be deemed economical with the truth to say that the impresario was in any sort of perceptible glee. “You diabolical and slothful blackguard! If you were such an excellent judge of the human condition, non-existent qualifications in psychology notwithstanding, at the very least you should have deposited your talent with the bankers. Then at the very minimum, you would have received some interest with little need for any handiwork on your part,” roared the bemused master. He ordered his muscled henchmen to henceforth seize the talent from him and add it to the stock of the one with ten. “For empirical evidence dictates that for the one with much some more will be added. However, the one with little, even that will be crimped from his grasp. Throw this numskull into the abyss where the only preoccupation will be weeping and gnashing of teeth,” added the master with little semblance of pity. In astronomical chronicles is equally recounted the eerie tale of how the minuscule Planet Mercury was stripped of its atmosphere due to its proximity to the sun whose gravitational pull is comparatively insurmountable, additional the tragic tale of how Planet Pluto lost its status atop the table of solar system planets consequent to its inability to clear its orbital path of asteroids, dust, random ice particles and all kinds of intergalactic debris as a result of its negligible gravitational puissance, but I digress.

Mumias Sugar Company’s woes are a tragi-comical subversion of the tale above where the man with much squandered his chance to gain more and is now the one tidally-locked onto the travails of the abyss. The gradual slide of Mumias Sugar Company into mediocrity and disrepair reads like the script of a terrifying horror movie.

In halcyon times, the pride of East and Central African Sugar millers, Mumias Sugar Company (MSC) stood head and shoulders above many others with only Illovo Sugar Africa – Umhlanga, KwaZulu-Natal, South Africa and Kenana Sugar in Khartoum, Sudan as its peers. At some point, it was one of the distinguished few together with its peers aforementioned that boasted a Diffuser, a highly utilitarian piece of equipment in the sugar extraction continuum. I carry the emotional burden of having been being among some of the last students who took their University Student Attachment at the esteemed establishment in better times before mismanagement among a myriad other egregious misdemeanours sounded the figurative death knell on the firm. Back to the Diffuser, many of the other sugar firms that dot the landscape still use the outmoded Milling process that is flagrantly inefficient with regards to the sugar content that is extracted from the cane pulp before its egress from the equipment as bagasse. For some context, a Diffuser makes use of jets of hot water that are run incessantly through the crushed cane with a collector trough at the bottom to enhance the amount of sugar extraction from the crushed sugarcane pulp. Theoretically, Diffuser extraction is said to extract up to 98.5% of the sugar content from prepared cane as opposed to a ceiling of 95% for the old-school grinding miller. This mechanism is a rather sturdy piece of equipment meaning that with little maintenance, downtime is minimal in comparison to the conventional mill whose gears and clutches are similar to a manual vehicle pertaining to maintenance. It assures of better product sanitation compared to the mill as a result of the entire system being maintained at a temperature of 75°C which inhibits microbial growth of yeasts and bacteria that would erstwhile partially metabolize the mixture leading to sugar inversion and loss of saccharine content. Additionally, the bagacillo (small fragments of bagasse) will not find their way to the sugar hence increasing the amount of bagasse that is recycled to fire up the sugar boiler for subsequent evaporation & crystallization of the cane juice. Moreover, the diffuser has a greater capacity for cane than the run-of-the-mill grinding mill. It is said that when Mumias was running at full throttle, all the cane in its nucleus, satellite and privately-owned estates would only reach 40% of full capacity of the machinery’s demand meaning that much more cane was still needed even then. This is the system Mumias Sugar had in better days.

Chainless Sugar Diffuser (Bosch Rexroth)

Things started going south as a result of poor governance, heavy commercial borrowing for investment in projects with indeterminate returns adjunct to procurement aberrations that unprocedurally pilfered money out of the firm into personal pockets. According to a taskforce report of the former Kenyan sugar titan but now in the throes of rigor-mortis, abysmal management resulted in the loss of the cash that would hitherto have been regularly paid to cane farmers for their deliveries and which had made them some of the wealthiest people in the locale. Stories are still retold by those who witnessed the brighter days from 1971 up to the early 90’s of men who vamoosed from their home addresses, setting up shop in market centres or better still making a beeline for Mombasa after a heavy injection of returns for their supply. Mumias Sugar was then expertly run by the Booker Tate Limited of England and with unequivocal proficiency. Mumias town thrived when white smoke billowed and machines roared at this particular factory. My very own old man recounts tales of how he put his younger siblings through school with proceeds from the family’s cane holdings promptly availed to Mumias in its glory days. Returns were healthy. However, governance malfeasance resulted in a cavalcade of monkey business with sometimes the company instructing loaders to undercut the producer (farmer) at the weighbridge so that the company would receive extortionately more cane than it paid for. Proceeds to the farmer also declined steeply leading to the demoralization of many farmers who were forced by the economic considerations to even uproot the cane in difference to other endeavours. The taskforce report also cast a pall on the commercial department that diverted the Ethanol (used for production of power alcohol) for industrial use supposed to be exported to Tanzania for some pocket change additional to importing ‘fictitious’ molasses tankers that never touched base on our shores. Coupled with many other malpractices by company staff that cost the industrial edifice millions, the menacing flashes of monetary turmoil could certainly be visible over the horizon. The phantom of multiple-procurement, single-sourced tendering, cooking (manipulation) of books of accounts to cipher the visage of wellbeing, inflated commercial activities when reality portended a bear run, engagements with known unscrupulous operators compounded the woes at Mumias.

MUMIAS SUGAR COMPANY ETHANOL DISTILLERY

The writing was on the wall by the year 2006 when the appointment of Dr. Evans Odhiambo Kidero coincided with the liquidation of the Mumias Sugar Company Soccer team that was flying high with the Kenya Premier League theirs to lose. Like a bolt out of clear skies, Dr. Kidero announced that sponsorship to the Soccer team had been terminated forthwith. In his program notes, he made it exceedingly clear that the core function of Mumias Sugar was not football tomfoolery but to mill albeit refine crystallized treacle. I remember poignantly and in lugubrious continence, the disbandment of Mumias Sugar Company Soccer team in 2006 and accompanying public sentiment. High-flying Kenyan national team-capped lynchpins like Nick Yakhama, Mark Sirengo, Ramadhan Balala among a raft of others were cut adrift and left to their own devices. As the season had no clear front-runners, it was yet another sugar-belt side, SONY that emerged as the best of the rest clinching a rare league title at a canter with little competition in sight. It should not be lost on anyone that the company hierarchy relented on their stance albeit strategically in 2011 for the ephemeral, token sponsorship of AFC Leopards ostensibly for political expediency accorded to the devious, then-departing C.E.O, Dr. Odhiambo Kidero who sought to contest the Gubernatorial Seat in Nairobi. The Abaluhya vote, tied to this particular soccer team was critical to his election.

Nick Yakhama during his playing days as a striker at Mumias Sugar Company FC
The Short-lived sponsorship of AFC Leopards by Mumias Sugar Company From 2011 saw an upturn in the team’s fortunes

Another glaring anomaly that crippled Mumias was their unsustainable remuneration structure. The Company built staff quarters for their workers which they inhabited in pageantry paying little if any rent for the quasi-palatial dwellings replete with lush backyards and validated parking. There are confirmed rumours that the employees of the company were entitled to a couple of 20 Kg cylinders of cooking gas a month, free of charge from management. It was no oddity to see men and women strutting their stuff all over supermarkets of this rustic, rural outpost with money virtually streaming out of their ears. Top-of-the-range fuel guzzlers were bought at a premium with little regards to fuel expenditure. Fuel cards were available compliments of the company. Many of the employees took their children to the high-cost, private Booker Academy within the premises at greatly subsidized fees. Even the Nabongo (King of the Wanga) who resided a stone’s throw away from the establishment must have been green with envy at such a display of opulence.

Back to the stark revelations of the report by the Taskforce chaired by Kassim Were on the teetering to collapse of Mumias Sugar, Officers in the Agricultural Department bore heavy culpability for the erroneous acquisition of Satellite farms, payment to ghost farmers abetted by rogue IT staff with an overstatement of the budget for inputs done in collusion with the Survey Section with diversion of the input-quota that was meant for the itinerant nucleus and long-standing cane farmers. Fraud cannot be ruled out wholesale as manufactured sugar was inexplicably diverted to other sugar distributors, inflated prices, discounts way beyond the acceptable norm and the export of sugar despite a national deficit that was orchestrated between the years 2006 – 2012.

Cane collection for Transportation

The company also suffered the ignominy of white-elephant projects that lacked feasibility and were abandoned midstream. Among these were the CCTV Installation project, the Access Control – Identification Management System (IDMS), a biometric HT Clocking system & a System Server for its Database, the aforementioned power alcohol fiasco and the new bagging machine added to the still-operational Form-Fill & Seal Machine bringing up the list of projects that were ill-conceived. It was the grazing season of collusion between a conceited Board of Directors keen to profiteer from a self-serving, thieving CEO, Insider trading at the bourse and Overseas Corruption that saw board members setting up a proxy account in Dubai to siphon customer funds. There was also the poorly-disguised, cheap Brazilian sugar importation syndicate that saw the bagging and exportation of this illicit sugar with the funds diverted to the invoked offshore account. It should be noted with concern that the repeal of the Sugar Act 2001 and in its stead the operationalization of the Crops Act 2013 left the Sugar Industry shorn of the firm regulations to safeguard it leading to a lacuna that was ruthlessly exploited by the piranhas that ominously swim circles around the sector. The Kenyan lack of protectionism, high cost of Electricity and by extension local manufacturing, unregulated laissez-faire conduct in the Sugar sector that saw the light of day with the loosening of the COMESA inhibitions has adversely contributed to the flooding of the local market with imported sugar stifling our own. Litigation against the company by unpaid suppliers that resulted in colossal out-of-court settlements and reparations dug the company into deeper fiscal woes. At the time of authoring this piece, Mumias Sugar as currently constituted is technically insolvent with its independently audited accounts unfurling current liabilities of Ksh. 30 billion against an asset base of Ksh. 15 billion. Needless to add is the rapidly deteriorating value of prized assets like the diffuser that will certainly fall into disrepair with longtime underutilization. 15 names had been recommended for further investigation by the Ethics and Anti-Corruption Commission. For reasons defying logic, this taskforce report has failed to be adopted by our bicameral parliament. Today, state bailout money is being pumped into the firm with minimal prospects of resurrection.

Mumias Sugar Packets packaging at the Form-Fill & Seal Machine (Alamy Stock Footage)

The consequence of these prevailing conditions is the depreciation in value of the surrounding real estate that is no longer affordable to the underemployed/unemployed. The formerly bustling locale of Shibale that is in the vicinity of the sugar factory has virtually become a ghost town. Rental houses sit unoccupied, some already reverting back to nature much to the consternation of the investors who injected millions to build the same. However, the real casualty has been the economy of a sizable tranche of the Western Kenya region. It lies in ruins. The loss of the PanPaper manufacturing factory was horrendous enough. To be compounded by the crumbling of Mumias Sugar is simply diabolical. The populace who had relied on cane farming for nearly two generations have been left orphaned and destitute knowing of Kenya’s economy as heavily reliant on agriculture more so cash crops. I know of families that have uprooted cane without an alternative cash crop to stand in the gap occasioned. In equal token, I am conversant with families who have decided to stick with their long-worn heritage and decided to make private arrangements to deliver cane to the nearby, better run and surviving millers. Of course, this has to come with the additional personal cost of transportation adjunct to having to pay bribes to ‘somebody who knows somebody’ in the higher echelons of management simply to have cane external to the catchment area of those factories in any kind of consideration for purchase. It has also taken a heavy toll on the nearby infrastructure as the extra-county roads were certainly not built for the elephantine load haulage of the sugarcane trucks.

The formerly bustling Shibale shopping centre is today a pale shadow of its former self (The Standard)

In recent times, a competitive procurement process for the acquisition of the lease to run Mumias Sugar for 20 years has been completed with a Ugandan conglomerate, the Sarrai Group coming up tops. Sarrai passed all the thresholds pertaining to the technical evaluation criteria, proof of financial capability, lack of conflict of interest, a bid bond of Ksh. 500 million to boot and indeed a proven track record of experience running a miller of similar magnitude. Sarrai group had initially been preceded in the bidding contest by Devki Group – under the auspices of Narendra Raval who were the early frontrunners but pulled out shortly due to their fatigue all the shenanigans and political nuisance going on behind the scenes. The also runs include Tumaz & Tumaz Group, West Kenya (Kabras) Sugar Group, Transmara Sugar and Kruman Finances. The three that reached the final evaluation stage were Pandhal Industries, Kibos Sugar and the triumphant Sarrai Group which eerily enough is owned by Sarbi Singh Rai, a brother of Jaswant Rai – the owner of Kabras Sugar with both being scions of the dukawallah patriarch, Tarlochan Singh Rai (deceased since December 28, 2010). Sarrai group has been proficiently running 3 sugar firms in Uganda each with a crushing capacity of slightly under 20,000 tonnes per day while employing 22,000, so adding their Kenyan holding onto that stable would only be the most logical status quo as our Kenyan overseers have been proven wanting. Moreover, they run a power co-generation station additional to an Ethanol plant. In the security of a winning bid, Sarrai had already purposed to restart tilling the nucleus estate, rehabilitating the factory roads, acquiesce spare parts for the staled equipment in sore need of maintenance and engage the utilities to reconnect power on-site among other preliminary activities for the revival. This has proven to be a casus belli. Almost immediately, four cases have been filled at our high courts challenging the award of the lease with as much as the kitchen sink being thrown ab initio by the vexed litigants who lost out on that cherry. A case of sour grapes! One of the cases that duly fell within the realm of frivolous litigation has already been adjudicated and ruled null and void as the miller was not subject to Chapter 12 of our Constitution, Article 227 also falling afoul of the Public Procurement and Asset Disposal Act. This was due to Mumias Sugar not being a state-owned entity despite the treasury still holding a 20% stake in the enterprise.

For the other three litigants looking for a pound of flesh from the Mumias Sugar gravy train, we have the Tumaz & Tumaz Enterprises associated with mogul Julius Mwale of the futuristic Mwale Medical and Technology City fame together with the Hamptons Hospital domiciled in Butere, Kakamega County. Crucial to note is that the entity inferred above did not even make it to the final stage of the bidding process despite issuing the highest, a verbal bid of 27.6 billion shillings. Not to cast any aspersions on the financial strength, by and large the character of Julius but issuing from dealings with other suppliers for his projects have been a torrent of hue and cry over unfulfilled pledges and just all-out hanky-panky. This is already flagged down as a disreputable and unscrupulous mercantile operator. Reliable sources inform the author of this post that the man behind this outfit had defaulted on goods and services worth 5 million Kenya Shillings acquired from the firm Davis & Shirtliff Plumbing and Reticulation Services Company in refurbishing a personal swimming pool for virtual pledges and a song. Services were rendered but when payment time rolled by, only 1 million Shillings was settled. The rest that had been agreed to be payable by banker’s cheques fell through whence the cheques ‘bounced.’ The character has been shifty when reached for assurances on when the bills would be settled. Consequently, I am compelled to label it a wild goose chase expecting such a fellow who is unable to foot a mere 5 million shillings bill to raise 27 billion shillings let alone the bare minimum bid-bond of 500 million!

West Kenya Sugar group have a chip on their shoulder which is the fact that by the rules of competition and dominance by one player, legally existing as Section 23 of the Competition Act would be gravely contravened by the addition of Mumias Sugar to Kabras Sugar’s holdings. The ghosts of Mumias Sugar’s 60% market share in its heyday still haunt the industry to this date, a situation that seeks never to be replicated.

Kruman Company bid 19.7 billion shillings while seeking a 25-year lease period despite the fact that they have little experience in running any sugar factory. This is a similar fate to Pandhal Industries which came in third in the competitive process. Kibos have marginally justifiable cause to feel slighted as they just fell short of the winning entity. The final tally gave Sarrai Group (58.4%) against their bid of 6.1 billion, Kibos Sugar (52%) against their 5.9 billion bid with 2nd runner up – Pandhal Industries (34.4%) against their bid of 7.7 billion. Contemporaneously, the desired position is of a player that can have rapid turnaround times pursuant to revival of operations, immediate employment and indeed breaking even against insurmountable debt.

But when did the rains start beating the denizens who depend on Mumias Sugar Company?

The oracle points to ineffectual, incompetent and uncoordinated political leaders from Western Kenya who watched Mumias sink to its nadirs while falling over each other jostling for kickbacks so as to engage in the perennial theatre of the absurd that is a divergent glut of them contesting the Presidency! What has any of them done to ameliorate the unemployment crisis that can be resolved by industrialization in Western Kenya? Veritable ‘tumbocrats’ is a phrase profusely used in Kenyan social parlance to lampoon such basket cases.

The absence of similar salvatory action from more of the leaders from Western Kenya in antipathy to seeking kickbacks proved to be the Waterloo for Mumias Sugar Company (Courtesy of Daily Nation)

One of the elected leaders from Kakamega County set the record straight recently on a TV show that the only factory in operation within a 20 KM radius of Kakamega town is the Super loaf bakery! Being a comical man, I felt he only restrained himself from mentioning the maize-flour milling establishments (Visiagi) that dot the landscape but he probably did not want to venture into the realm of derision on such a touchy subject of the economy of the ambient region. Do not even get me started on yet another well-known, blackguardly political apparatchik who also doubles up as a scrap metal dealer that has set up his yard right in the annals of Shibale, a stone-throw away from the ailing sugar factory. Your guess is as good as mine where the metal pieces ostensibly collected for recycling are obtained from! Stealing another’s thunder is the name of the game around here.

In an effort to ring-fence the cane requisite for the revival of Mumias Sugar, my good friend Peter Salasya, a hot-headed but well-meaning youthful politician (has thrown his hat into the ring for election as Mumias East MP) was a fortnight ago thrown into the gaol for allegedly creating a disturbance likely to cause a breach of public peace along the Kakamega- Mumias thoroughfare. Among other allegations, he is said to have led demonstrations that barricaded the roads stopping the trucks ferrying the valuable raw material for sugar production to Kakamega town and onwards to West Kenya and Butali Sugar. He’s currently out on bond, ergo these are the heights some who are passionate about Mumias Sugar’s revival are willing to scale to ensure a resuscitation of this behemoth of sugar milling in Kenya.

Mr. Salasya at his vocal best (Courtesy of KTN News)

But what Solutions exist pertaining to a speedy revival of Mumias Sugar?

The report authored by Kassim Were recommends a retinue of measures to ostensibly turn around the fortunes of the once resplendent miller:

  1. Safeguard the land – A caveat on community land hosting company assets to prevent grabbing and irregular disposal.
  2. Shareholding – A quest to have the exchequer forego its current 20% holding in the enterprise transferring the stake to the county government to give the county unquestionable anchoring in decision-making geared at a resurgence for the giant miller.
  3. Interim Management – There is need for 5 years of emergency management to forestall the crisis currently precipitated by a hatful of one-upmanship litigation proceedings against the Sarrai Group who had erstwhile been awarded the reins to attempt to revive Mumias. We can no longer be wasting valuable recuperation time while assets are continuing in dilapidation with the residual distillation of Ethanol tanking tangent to ceaseless engagements in the Courts of Law. Time is of the essence as the period typically expended in litigation more so in a nation that has weak structural laws on reasonable length for court process as ours may result in a pyrrhic victory to whoever garners the ruling with the company by then beyond salvation. As per the stipulates of the report, a year should be reserved for emergency management, two years for stewardship restructuring and professionalization and two extra years for recovery. Cost-cutting measures are of the essence as runaway pilferage is the reason Mumias got into this jam in the first place. We also need to seal the loopholes that were used by those who looted Mumias of its glory in days bygone.
  4. Financial – Mumias is in need of aggressive investment in cane development, if possible prioritization of the rapidly maturing varieties to aid in the rapid turnaround. Debt restructuring is also of the essence as Mumias Sugar is presently mired in inscrutable debt that if required back in a ‘flash in the pan’ manner would eviscerate the mill to cripple irretrievably any prospects of a revival. Intensive capital injection for salient operational milestones is also paramount to the renaissance of the staggering miller.
  5. Recalibration of our societal moral compass – A cultural shift around how we view institutions in our ambient community just has to change. Corruption is a key factor in the collapse of Mumias Sugar. I am sure there are community elders who clearly saw Mumias Sugar sink into the red yet they were quiescent of any sort of remedial action, preferring to be silenced with a small bribe in ‘Busaa’ shebeens lingo known as ‘chai ya wazee.’ Assassin-hits have been at a premium over matters relating to the finances lost at Mumias with the guilty attempting to hide their tracks. We gloss these over merely as ordinary acts of crime forgetting the fact that we have more to lose with the loss of any industry or factory for the community. I have gone on at length in a previous blogpost that was even deemed valuable enough for publishing in the national dailies last year about the perils to our local economies specifically and national tax revenues at large if we allow mega-industries like Mumias that employ millions of people directly and indirectly to collapse.
The human being is fatally flawed with greed being insurance for the conman who will never miss out on the next victim.

In terminal remarks, I would like to wish the Sarrai Group or whoever else is tasked with the revival of this elephantine miller to its past glories all the luck in the world as they undertake this gargantuan task. Beware of the wiles of the unscrupulous and feckless political operator that will always lurk in the shadows while purportedly acting in public interest all the while having the silencing of their tummy’s rumblings as sacrosanct in all undertakings. In repurposing the articles of the Unilateral Declaration of Independence by American founding fathers: These are the truths to be held self-evident that morally-invertebrate politicians will always be on the lookout for that unearned buck that will be channeled back to the impoverished and unenlightened masses as handouts. For the avaricious is endowed with certain inalienable fallibilities that make it difficult to miss out on a victim ready to be conned with little by way of material means to ever satiate the conman’s greed.

By dennismukoya

I am a consummate thinker of new solutions which I passionately endeavour to implement.

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