Why Kenyan Sugar Firms Are Failing to Compete Effectively Within the Liberalized Trading Environment in Kenya: the Case of Government - Owned Sugar Firms

Abstract

This study was carried out between April and July, 1999. Its focus was on the Kenyan sugar industry in the changing Kenyan business environment. The study as reported in this project sought to establish why Kenyan sugar firms were finding it increasingly difficult to compete within the changing Kenyan business environment. The specific objectives of the study were: one, to establish the factors undermining the competitiveness of the local sugar firms; two, to find out if the local sugar firms were making any responses in reaction to the changing Kenyan business environment; and three, to identify what company managers, and other stake-holders consider as important measures that need to be undertaken to enhance the competitive level of government-owned sugar firms. This study which involved all the government-owned sugar firms, namely, Mumias Sugar Company, Nzoia Sugar Company, Miwani Sugar Company, ChemiliI Sugar Company, Muhoroni Sugar Company and South Nyanza (SONY) Sugar Company, yielded a number of important findings. The study found out that Kenyan sugar firms were facing very stiff competition from imported sugar. As such, the local sugar firms are reported to be seriously negatively affected currently. A number of factors thought to be undermining the competitiveness of the local sugar firms, have been identified by this study. This include unfair competition from imported sugar, inferior production facilities, and poor management of company resources, among others. This study points at a number of strategic measures that the local sugar firms have and/ or are still putting in place in response to the changes currently taking place in the Kenyan business environment. Employee retrenchment, improvement in production efficiency, sub-contracting of services considered to be subsidiary to core functions. and increased marketing activities, are some of the prominently cited strategic measures being undertaken by the local sugar firms in response to the changing Kenyan business environment. The study further records a number of specific measures, In the view of respondents, that need to be undertaken by the industry stakeholders to ensure the sustained competitiveness of the local sugar firms.