This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Mumias Sugar Company has hired eight managers to replace those sacked last year in a corruption purge. In a recent recruitment exercise, the cane miller failed to get a candidate who met the requirements for the position of CEO, with the management saying the applicants were not suitable to the needs of the company.

Our View: The new developments are in-line with the company’s transformation agenda after receiving KES 1bn bailout from the government (KES 0.5b from Treasury and KES 0.5b from the Ministry of Agriculture). We expect this to improve the company’s cash flows position although the company still faces immense challenges including competition from local millers as well as imports. Kenya is a low yield country which produces approx. 60t/ha in a period of 18-24 months compared to Brazil which produces approx.120t/ha in a period of 18 months. 
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