Labour and Social Protection Cabinet Secretary, Alfred Mutua has assured the Senate that only 20 percent of sugar industry employees will be released under the government’s ongoing restructuring and revival of State-owned sugar companies.
Appearing before the Senate on Wednesday morning, the CS said the plan, which affects Chemelil, Muhoroni, and Miwani Sugar Companies in Kisumu County, has been designed to protect jobs and livelihoods while bringing efficiency to a sector that has long been crippled.
“It’s important to note that not everyone is being sent home,” Mutua said. “According to an agreement between the government and workers, only 20 percent is the maximum number of people to be laid off.”
The 20 percent layoff cap stems from an agreement between the Government of Kenya and the Kenya Union of Sugar Plantation Workers, reached as part of the sugar sector revival framework.
Under this deal, private investors taking over state-owned mills such as Chemelil, Muhoroni, and Miwani are required to retain at least 80 percent of the existing workforce to protect livelihoods and sustain factory operations.
Only a maximum of 20 percent of workers, mainly redundant or non-core staff, will be released, and all will receive full compensation and accrued benefits from the government.
The retained 80 percent will continue working under new management to ensure continuity in production and community stability.
The CS said all affected employees will receive their full redundancy packages, including compensation for years of unpaid wages and benefits.
“Anyone who is not being retained will be paid all their dues,” he said. “Those who are pensionable will be compensated for the remaining years to retirement, while those on contract will be paid up to the end of their term. We have ensured that human and workers’ rights are fully respected.”
Mutua revealed that the Government of Kenya has already disbursed Sh1.8 billion and plans to release an additional Sh3.8 billion this year, part of a Sh15 billion commitment to clear outstanding payments to employees and farmers.
“The government has committed to pay everything in installments up to Sh15 billion,” he said. “That amount will cover all costs and ensure every worker is comfortable.”
Kenya’s sugar industry has for years been at the centre of economic and political debate.
Once a vibrant employer supporting over 500,000 workers and eight million livelihoods, the sector’s decline left communities in Nyanza and Western regions economically vulnerable.
According to the Ministry of Agriculture, the five state-owned mills, including Chemelil, Muhoroni, Miwani, Nzoia, and South Nyanza (Sony), collectively owed about Sh128 billion in debts as of 2024.
Chemelil alone owed Sh1.38 billion, while Muhoroni’s debt stood at Sh1.39 billion.
The collapse of these factories crippled sugarcane farming, reducing national sugar output from over 700,000 tonnes in 2015 to around 600,000 tonnes in 2020.
Although production has since recovered slightly, reaching 796,554 tonnes in 2022, the industry still operates at only about 70 percent of its milling capacity.
Mutua said the government’s revival plan was informed by a detailed socio-economic study that examined how to balance fiscal reforms with job protection.
“It was not just an economic study,” he told senators. “It was about reviving a sector, creating wealth, and giving farmers who had given up a reason to return to sugarcane. It’s no longer a light at the end of the tunnel, it’s a glowing sun.”
He added that the state had midwifed new private investment deals with clear labour safeguards.
Investors taking over leased factories are allowed to restructure a maximum of 20 percent of the workforce but must retain or rehire the rest.
“The agreement is clear, you come in as an investor, you can only send home 20 percent, so you retain workers and even create new opportunities,” Mutua explained.
