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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:
Plans are underway to write off Sh33 billion in debt owed by five sugar companies to make them attractive to investors. Chemelil, Miwani, Muhoroni, Sony and Nzoia Sugar companies owe the government a cumulative Sh59 billion accrued over years of mismanagement that have brought the mills to their knees.

Our View: The move is aimed to revive the sugar industry in Kenya which continues to face increased challenges including high cost of production, inadequate cane supply and aged cane crashing technology. The additional KES 5.9b debt will sweeten the tea ahead of investor consumption in the much awaited privatization. About 24% stake of the sugar companies will be disposed to the farmers and employees of the firm.
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