Over 100,000 sugarcane farmers and over 5 million people who depended on the existence of Mumias sugar company for their livelihoods can now have reason to smile after the company is reported to be getting on its feet once again after it was on the verge of collapsing.
The company’s new management chairman Dan Ameyo and chief executive officer Errol Johnston have assured farmers and stakeholders that the company is right on its recovery track and exuded confidence that in the next three years the multi-billion company shall be fully operational.
Speaking during the company’s Annual General Meeting held at the Tom Mboya Labor College in Kisumu city, the chairman in his statement said that last year at such a time the company was going through unprecedented problems that made it stare at a total collapse.
He further added that the collapse could have put over 100,000 farmers who supply their cane to Mumias Company and over 5 million people who rely directly or indirectly to the company into untold suffering as their livelihoods and dreams could have been shuttered.
However he appreciated the stakeholders move that passed resolutions in an Extraordinary General Meeting – EGM held earlier in the year that marked the beginning of the journey of resuscitating the operations of the company and to restore the former glory of Mumias Sugar Company.
Ameyo unveiled a detailed turn-around strategy approved by the company’s long term lenders as well as by the government as a major stakeholder.
Among the strategies laid down by the new management is;
· A new, refreshed organization structure.
· A rejuvenated new governance and leadership team put in place.
· Board of directors candidly explaining to the management team the task ahead of them.
· A new relationship with cane farmers aimed at assuring an adequate supply of quality sugar cane.
· Restructuring the supply chain process.
The chairman further revealed that the famous KPMG forensic report has been approved and commissioned by the board of directors whereby the recommendations given there in are being implemented.
Mr.Ameyo further noted and appreciated the bail-out of Ksh. 1 billion by the national government to Mumias Sugar Company which was used by the management in payment of farmers’ arrears and carried out critical factory maintenance in July this year.
He further unveiled the new deal signed between the company and lenders a debt restructuring plan of two years moratorium and a five-year repayment progress and finalizing the other terms.
He said the deal has improved the company’s cash flow status to enable it pay creditors in a more agreeable manner so that it continues receiving critical supplies for the plant and equipment.
“We have more-or-less reached agreement with all our lenders to reschedule the existing loans and that is a major step because we are now not scared always thinking that any of the bankers will come and take action against the company because all our lenders have agreed and probably by next week we shall be signing a term sheet that actually put in effect the restructuring process,” Ameyo said.
“I want to state that I have a board that is totally committed to revitalize this company and that I can tell you without any shadow of doubt because the board members have worked tirelessly when Errol was not there they spend extra time to do things that could have otherwise been done by the management but it became necessary for the revitalization of the company,” the chairman added.
The CEO on his part promised that the factory efficiency and improvement of cane quality shall be realized in three to five years.
“In terms of efficiency we will make a few changes from next year because we have a problem with low cane quality due to a number of issues including rainfall extremes that make the cane quality low and therefore the factory efficiency can be attained within three to five years when we can achieve an intrinsic cane quality at the company,” said the managing director.
Paradigm shift in cane development
Mumias sugar Company is embracing a paradigm shift whereby the farmers who have been kind of been spoon-fed by the company in the cane development process shall now be offered more options that shall see them be more involved in investing in their sugarcane growing other than leaving virtually everything to the company.
Since the inception of Mumias Sugar Company farmers have been treated to a culture of leaving literally all the inputs to the company ranging from the company getting land for the farmer, surveys it, ploughs it, harrows, provides seed cane and any other input leaving the farmer with little or nothing to put in their cane development.
“We would like the farmers of Mumias to treat sugarcane growing as a commercial product for which they are responsible until the sale. To feel ownership of that product and not think it is the product of company,” he added.
He said the company wants to inculcate in farmers the spirit of ownership of that cane by committing their own resources in cane development and be encouraged to be self reliant in producing cane to sell to the Company.
“Farmers invest resources in maize and beans and other crops without being supplied with any farm input from anybody or any company they should do the same to cane farming and invest in it by taking good care of it,’ noted the chairman.
Stakeholders punched holes in management
However despite the road map laid down by the new management, stakeholders and farmers who attended the meeting pointed out a number of issues that they feel the management has not implemented or achieved yet.
First the stakeholders demanded for the immediate release of the KPMG report to the farmers and a stakeholder pointing out that the management has refused to make the report public.
Mumias East Member of Parliament Benjamin Washiali pointed out how the management has treated the report as a private affair and even went further to deny the parliamentary committee on agriculture in which he is a member.
He further demanded for the closure of the company’s Nairobi office which he said was not viable to be maintained by the company that pays a lot of money to retain and it and further wanted to have the company’s AGMs held in Mumias other than Kisumu.
“We had agreed in our previous AGM that all the other subsequent AGMs be held in Mumias where the company. Why has it been difficult for this board to make a decision once and for all to hold these AGMs where the company is in Mumias,” asked Washiali.
Others demanded for the release of the KPMG report which they said they only read from the media naming some people implicated in the near collapse of the company yet the farmers and stakeholders are not privy to the report.
They wanted to see the people implicated in the report to be arraigned in court for having led to the collapse of the company and criticized the current management for acknowledging the work of former directors whom they said were responsible for the current situation that is witnessed at the company.
“Last year you promised to give us the full details of the KPMG report, we had an Extraordinary General Meeting and now the AGM but the report is nowhere to be seen yet the report has been a major cause of reports in the media as to how Mumias Sugar Company has been mismanaged. We have seen names of people mentioned in that report yet we as investors you are not telling us what is in that report,” said another farmer.
Other issues included lack of supply of farm inputs by the company to the farmers hence affecting the sucrose content and also the overcharging of farmers by the transporters who carry the farmer’s cane.
During the meeting the farmers and shareholders participated in electing six new directors for the company who shall be in the company’s board whereby the current ones were given chance to tell the meeting why they should be re-elected and new interested ones also showing cause for their election into office.