How Uganda overtook Kenya in sugar cane production

daily_nationBefore Kenya decided to nationalise the sugar sector after independence, it was almost at par with Uganda in terms of production. Two Indian families — the Mehtas and the Madhvanis — dominated the scene in both countries.

The drop in Kenya started after the Mehtas lost their Chemelil plantation to the government, which wanted to start a new state-run factory there.

The Mehtas decided to concentrate their efforts in Muhoroni, where they had a small plantation, while also developing their sugar estate in Lugazi, Uganda.

The story of the Mehtas and the Madhvanis — their successes and failures — is also the story of sugar in both Kenya and Uganda.

Nanji Kalindas Mehta had arrived in East Africa in 1905 and had opened his first shop in Kamuli, some 64km north of Jinja town, purchasing African produce and ivory. It was after World War I that he shifted to cotton and sugar farming and quickly became Uganda’s leading sugar industrialist.

By 1924, he had a 6,000-acre sugar estate in Lugazi where he had also put up a factory. He then expanded his estate and it stretched to 22,000 acres, which produced 60,000 tons a year and employed 10,000 people.

It was Mehta’s son, Mahendra Kumar, who started developing the Miwani estates and factory where they were also manufacturing Sukari Gur from their jaggeries. Sukari Gur was popular with both Asians and locals.

Today, Lugazi is Uganda’s largest sugar producer — despite the 1972 setback when the Mehtas were evicted from Uganda during Idi Amin’s purge on Asian entrepreneurs which saw more than 50,000 leave.

It was only after the toppling of Amin that President Yusuf Lule invited the Mehtas and the Madhvanis back to their sugar estates and factories, which were dilapidated and neglected.

Like the Mehtas, the Madhvanis had established the Kakira sugar plantations, thanks to the business acumen of Muljibhai Madvani, who had arrived in East Africa as a teenager to work at a brother’s shop in Jinja, Uganda.

The business, Vithaldas Haridas & Co Ltd, grew quickly, acquiring land and expanding rapidly. With enough money and land, they borrowed a leaf from the Mehtas and went into the sugar industry.

They closed down the shop and Muljibhai’s elder brother left for Kenya’s coast where he took over Ramisi Sugar, which had opened in 1927. Muljibhai decided to build the Kakira plantations.

By the time he died in 1958, aged 64, Muljibhai had established the Kakira industrial complex, and operated a sweets factory (known by the brand name Madhvan), a ghee factory, a glass mill, and a jaggery plant.

The business was taken over by Jayant Madhvani, who died in 1971 aged 49 years.

This was the time that Asians were coming under pressure from Uganda President Idi Amin to leave.

As far back as 1967, Uganda had surprised the ministry officials with the growth of its sugar industry. By then, of the three East African countries, only Uganda had a surplus stock of 35,000 tonnes of sugar, thanks to both Kakira and Lugazi estates.

Both Madhvani and Mehta groups had sought to be allowed to fill Kenya’s 7,000 tonnes export quota agreed under the Commonwealth Sugar Agreement.

We have not seen records on whether Kenya agreed to this suggestion. But there is a policy document authored by Mr Ralph Clark, a development planning adviser based at the Treasury, which informed the thinking about sugar imports from Uganda (perhaps to date).

He wrote in the document dated January 1967: “Imports from Uganda would need to be considered in the context of trade policy with Uganda as a whole … If providing existing mills are working to capacity … there would seem to be nothing lost to the Kenyan economy.

A price much above (Kenya’s production price) would represent a subsidy to the Ugandan economy, which may be worthwhile if there are other compensating advantages.”

Documents in government files show that as Kenya continued to start its sugar industry on the wrong footing, the Mehta Group Uganda sought to help and wrote to the Director of Settlements, Mr J.S. Mburu, with offers on transport and transloading of cane. Kenya refused.

One of the early warnings was that Muhoroni factory (with the loss of Chemelil Estate) would become “uneconomical” if the lands around the factory were not fully developed. This warning is contained in a 1967 paper that was presented to the Sugar Advisory Council.