VENTURES AFRICA – Kenya’s government has revealed it will inject 500 million shillings ($5.5 million) to bail out cash-strapped Mumias Sugar, the country’s largest sugar company. The announcement, made by Agriculture minister Felix Koskei, sent the firm’s shares up by 5.5 percent at 2.95 shillings a share on the Nairobi Securities Exchange on Friday. Koskei said the money would help turn around the struggling company, which accounts for more than 30 percent of Kenya’s annual sugar production.
The agric minister disclosed that , as part of the bailout, the government would seek to change the company’s management and prosecute any managers who may have led to the company’s near-collapse. In June Mumias dismissed two top managers who had been suspended to allow the company to investigate “questionable sugar sale and importation transactions”, Reuters said.
According to the news agency, Mumias posted a loss before tax of 3.4 billion shillings ($38 million) in 2014 compared with a loss of 2.2 billion shillings the previous year, which the company blamed on weaker sugar prices. It quoted Koskei saying that the company’s decline was “largely due to key lapses in management and governance which have resulted in the company incurring losses or being locked into unfavourable trading arrangements.” “Given the strategic role that the company plays in the Kenyan economy we shall do all it takes to rescue this market leader,” he said.
