The Kenyan government has launched a decisive, two-pronged strategy to breathe new life into its sugar industry, signaling an unwavering commitment to achieving self-sufficiency and phasing out imports by 2027. This ambitious revitalization plan kicks off with a temporary three-month suspension of all sugar milling operations in the Upper and Lower Western regions, effective July 11, 2025. Coinciding with this temporary halt is the official implementation of the Sugar Development Levy (SDL), a critical financial instrument designed to fuel the sector's long-term growth.
The directive for the milling hiatus, communicated through an official notice from the Kenya Sugar Board, targets key players in Western Kenya, including Nzoia Sugar Company, Butali Sugar Mills, West Kenya Sugar Company (encompassing its Olepito and Naitiri units), Mumias Sugar (2021) Ltd, and Busia Sugar Industry Ltd. According to Kenya Sugar Board CEO Jude Chesire, this drastic but necessary measure stems from an acute shortage of mature sugarcane in both regions, a consequence of what has been identified as inadequate cane development planning. This has led to the premature harvesting of immature cane and a significant decline in sugar production during the first half of 2025.
"This suspension will allow sugarcane to mature and enable a reset in cane supply planning," stated Chesire, following a stakeholder consultative meeting held in Kisumu on July 4. He further added that a comprehensive cane census would be conducted within two months to accurately assess field readiness before operations resume. During this period, all affected millers have been explicitly directed to intensify their cane development initiatives, ensuring a sustainable and consistent supply of raw materials in the future.
Complementing the operational pause is the official rollout of the Sugar Development Levy (SDL), effective July 1, 2025. Set at a rate of 4%, this levy will be applied to the ex-factory price of locally produced sugar and the Cost, Insurance, and Freight (CIF) value of imported sugar. The Kenya Revenue Authority (KRA) has been designated as the official collection agent, with all levies due by the 10th of each month following production or importation. KRA is expected to issue detailed compliance guidelines imminently.
To enhance transparency and streamline reinvestment, the National Treasury has also approved the transfer of the Sugar Development Fund from the Commodity Fund directly to the Kenya Sugar Board. This strategic financial restructuring is expected to inject credit discipline and foster more effective sector reinvestment. Chesire elaborated on the anticipated distribution of the SDL proceeds, estimated to generate over KSh 5 billion annually. A significant 40% (approximately KSh 2 billion) will be channeled into cane development programs, while 15% each (KSh 600 million) will be allocated to roads rehabilitation in sugar zones, vital research and innovation, and crucial factory modernization. Farmer institutions will receive 5% (KSh 200 million), with the remaining 10% dedicated to the Sugar Board's administrative functions. Furthermore, from September 1, 2025, all loan repayments by stakeholders will be remitted directly to the Sugar Board.
Chesire expressed strong optimism that the combined impact of these reforms – including the ongoing leasing of four state-owned mills and expanded private sector involvement – firmly positions Kenya to eliminate sugar imports entirely by 2027. "With the SDL in place and proper financing mechanisms, we are now on the right track. The failures of the past must not be repeated. This is the moment to reclaim the future of Kenya’s sugar industry," he asserted. Industry players are now strongly urged to thoroughly review the new SDL framework, accelerate cane development efforts, and ensure full compliance with forthcoming KRA guidelines to collectively realize Kenya's vision for a self-reliant and thriving sugar sector.
