An evaluation of long term sources of capital among government-owned sugar companies in Kenya
Government owned sugar companies have been facing financial problems as reflected in their current financial statements. This has been attributed to the high costs of production and lack of long-term finances to modernize the factories to increase productivity and turnaround the firms. The purpose of the study was to evaluate the long term sources of capital amongst the Government-owned Sugar companies and identify the risks associated with the identified Sources. The research design used was a census survey. The population comprised the five government owned Sugar firms in Kenya which were Muhoroni, Chemelil, Nzoia, SONY and Mumias Sugar Companies. The findings of the research showed that the SDF Loan from KSB was the most relied source of long term financing with Muhoroni relying wholly on this source. Preference for the SDF loan was due to the low interest rate and its availability to all firms regardless of reported financial performance. To tum around the industry, there is need to source for cheap long-term financing. With privatization of Muhoroni, Chemelil, Nzoia, and SONY Sugar being awaited, it will be necessary to re-structure the Debt-Portfolio. SDF loans is the main contributor to the NonPerforming Loans owed by these firms. The restructuring of the debt portfolio is possible since the SDF Loan is disbursed through the Kenya Sugar Board which is also a Government organ. This is possible when such Debts are converted into shares to attract a good market price of the shares upon issue.