Kwale International Sugar Project

Kwale International Sugar Company Ltd (KISCOL) is developing a US$200 million sugarcane growing and processing facility and a biomass power plant. KISCOL incorporates 5,000 hectares of cane cultivation in its own land (nucleus) plus 4,000 ha by out-growers, a 3,000 tonnes of cane-crushed-per-day sugar mill, an 18 megawatt bagasse-fired power plant and a sophisticated sub-surface drip-irrigation system, resulting in affordable, local sugar. KISCOL is expected to be fully operational by mid-2014.
Knowledge buildingCommunity participation and inclusivenessPolitical ownership, collaboration and approvalFinancial sustainabilityAchieving co-benefits and balancing trade-offBuilding local capacityTransferableMonitoring and evaluation


KISCOL was nominated for the AfriCAN Climate Awards

KISCOL, a subsidiary of family-owned investment company Pabari Investments Limited, was launched in 2007 by the former President of Kenya, H.E MwaiKibaki. The project was initiated by the Pabari Family who now own 75% stake while Omnicane Ltd., a sugar miller listed in the Mauritius Stock Exchange, took a 25% stake in the project in 2012.

Cane-planting commenced with a sub-surface drip irrigated cane nursery in 2009 expanding to over 4,400 ha of irrigated cane and 600 ha of non-irrigated cane. KISCOL aims to harvest up to 140 tonnes per ha of irrigated cane and 60 tonnes per ha for the rain-fed cane. KISCOL conducts various environmental conservation initiatives around the project site with schools receiving tree seedlings donations for their tree planting exercises. KISCOL’s green cane harvesting method helps by reducing cane burning before harvest. Cane-planting requires land-clearing involving removal of trees and KISCOL has embarked on a tree-planting program to mitigate the effects of the removed flora and fauna.

The sub-surface drip-fed irrigation system helps to save on 40% of the water requirements for crop growth and minimizes use of fertilizer and leaching of agricultural rest products to the aquifer. KISCOL is implementing an Environmental Management Plan based on an Environmental Impact Assessment following Equator Principles to adhere to strict environmental procedures. Bagasse, a by-product of sugar production will be the main bio-mass material for co-generation with 25% electricity produced being used by the factory, 25% for the supply of water and for the irrigation system pumps and 50% supplied to the National Grid to ease Kenya's power demand.The first beneficiaries of this project include the out-growers; set to produce sugarcane on approximately 4,200 ha of land. Apart from earning a living from supplying cane to the factory, they will benefit from health facilities, education and a medical insurance scheme provided by KISCOL.

1. Knowledge building
Students from universities and colleges all around Kenya (as well as a team from Oxford university) visit the site to experience state of the art cane cultivation practices, based on technology imported from Israel (sub-surface drip irrigation) and India (sugar mill and co-generation plant) and to discuss issues pertaining to sustainable development in general. The implementation of this type of irrigation system on such a large scale (second largest scheme in Africa) will boost knowledge of irrigation in sugar cane and other crops. An extensive Environmental Impact Assessment following international Equator Principles has been conducted by Environmental Resource Management UK (ERM) consultants, from which mitigation measures currently being practiced were derived. In collaboration with Kenya Sugar Research Foundation sensitivity studies were performed to determine the best yielding cane varieties which will be deployed for both the irrigation and rain-fed cane. The project’s certified environmental consultant has produced significant studies which have guided the direction that KISCOL will take to ensure compliance to international, regional and local Good Environmental Practices and Standards thereby limiting the projects carbon footprint. Furthermore, the project water consultants have produced a massive database on rain fall, river flow and ground water resources for the project area to prepare an extensive plan for harvesting water for the irrigation system in a sustainable manner, based on advance modelling of water resources. This database may also be useful for other projects and agricultural activities in the area. Finally, the project also provides internship opportunities to undergraduates from various universities for hands-on expertise. Students from all levels frequently visit the project site to learn about the processes involved in activities such as cane agriculture, sugar processing as well as environmental conservation.
2. Community participation and inclusiveness
In adherence to National Environment Management Authority (NEMA) regulations, KISCOL held consultative meetings at the grass-root level whereby the locals underwent proper induction to the project with detailed explanations regarding the benefits it would bring to the area. The local administration has also been actively involved since inception in ensuring that rules are followed. Local farmers are also expected to benefit directly from the project including access to ready markets, credit facilities provided by the company as well as collateral to long term loans and a fully funded medical insurance scheme for the farmers and their families.KISCOL has provided employment to over 1,000 people, with over 90% of them coming from Kwale County. The employee base is expected to exceed 2,000 by the time the factory starts crushing cane in mid-2014. High preference is usually given to people from Kwale County during staff selection.
3. Political ownership, collaboration and approval
The development of sugar cane along the coast fits in the year-2030 development plan of Kenya for increasing self-reliance of agricultural products. Kwale County being one of the poorest counties in Kenya is a critical focal point for the Kenya Government for development. H.E the President of Kenya, Uhuru Kenyatta, visited the project as his first official visits after the election.Various stakeholders from different government institutions played important roles and provided support to oversee the smooth running of the project. These include the Ministry of Agriculture which, as the principal owner of all land in Kenya, encouraged the promoters and leased 15,000 acres (6,000 ha) of government owned land to KISCOL for the development of a nucleus estate. The Kenya Sugar Board, which is the regulatory body of the sugar industry, recommended cane varieties and provided trial results through the Kenya Sugar Research Foundation (KESREF) station in Ramisi. The Ministry of Finance, who granted KISCOL an exemption from taxes on investment by the ministry thus reducing costs that would otherwise be incurred by the project through various procedures including acquiring imported equipment. Buy-in and support has also been secured from Kwale County Government where, through the county leaders, the project was granted necessary approvals in order to delve in activities such as out grower trainings.National Environment Management Authority (NEMA) issued the necessary licences and permits to carry out the development and operate the sugar cane growing and sugar cane processing complex. Furthermore, NEMA issued licenses to construct dams and drill boreholes to supply water to the project and the Ministry of Water and Irrigation Water Resources Management Authority (WRMA) issued licenses and permits to construct water storage structures, drill boreholes and extract water for irrigation.
4. Financial sustainability
KISCOL is financed from equity and debt secured by the promoters. Funding of the $200 million project is accumulated between a 40% equity share and 60% debt. The debt has been raised through a syndicate of both local and international banks, the lead of this syndicate being the CFC Stanbic and PTA banks. Various initiatives were carried out to secure funding of the project. These activities include: pre-feasibility and feasibility studies, environmental impact assessment, resettlement of affected people, due diligence of the project by the banks as well as satisfying all the conditions precedents requested by the banks. The project feasibility was also attractive to donors due to the climatic factors prevalent at the coastal site. World-wide, successful sugarcane projects thrive in low altitude areas with elevated temperatures. KISCOL will therefore benefit by obtaining two harvests (once every 12 months) in about the same time it takes to obtain a single harvest (once every 24 months) in the high altitude areas of Kenya. This should be scalable in opening up additional sugarcane growing areas along the East Coast of Africa. A second clincher was the deployment of the Sub-surface Drip Irrigation system. The water and energy savings are enormous with higher yield guarantees. As a farming model, the duplicability of KISCOL as a Greenfield project should serve as a winning model for similar projects elsewhere. During operations the cost of mitigating any on-going environmental and social impacts will be financed from the proceeds of the sales of sugar and other products. KISCOL considers adhering to the ESMP a part of the normal operational cost of the complex.
5. Achieving co-benefits and balancing trade-off
The project continuously creates employment opportunities at each completed phase. When it started in 2007, the project had 50 casual labourers. This has changed and it currently has over 60 permanent staff and 2,000 casual labourers. KISCOL is involved in various environmental initiatives around the project site. The sub-surface drip-fed irrigation and water management system helps to save on 40% of the water requirements for crop growth. Dams were also constructed as sources of water for the project. It also increases the resilience of the system to impacts of climate change induced droughts.KISCOL’s green cane harvesting method whereby the leaves and tops of the cane are left on the ground as a 'trash blanket' protects the soil from erosion, increases soil moisture, provides weed control, provides nutrient and soil-health advantages, reduces herbicide use and avoids caneburning. Finally, KISCOL also donates tree seedlings to various schools within the area for their tree planting exercises. A healthcare facility was established through Getwell Hospital Ltd at the site to serve factory employees, their families and the entire community. This provides affordable, available healthcare at subsidized costs. All the labour and the larger community will have access to National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF) and a health insurance cover.First aid training to KISCOL employees improves healthcare not only on the farm, but also at home. Poverty levels in Kwale County have been known to be high. This project has helped improve livelihood by investing in over Kshs. 2 million weekly in wages to the casual labours therefore generally improving the area’s economy as a whole. KISCOL strictly adheres to a policy that only two-thirds of an out-grower’s land can be planted with cane, allowing the remaining one-third to be used by the farmers in subsistence farming. This ensures food security for the farmers and their families while still supplying cane to the project. Shops, food vendors and hotels have sprung up around the KISCOL nucleus, and entrepreneurs from the area have helped improve transport conditions within the area. Children in the area have also benefited from the project through various CSR activities undertaken by KISCOL for the benefit of the community. These activities include the construction of Duncan Ndegwa Primary School in Fingirika; donations towards the construction of hostels at Matuga Girls High School; provision of funds for installation of Electricity at both Ramisi Primary and Secondary schools; grading of roads to allow easy access to villages around the area and the grading of sports fields for various educational organizations.
6. Building local capacity
KISCOL provided organisational, management and logistical training to the out-growers to ascertain that they have the capability to manage the growing of the sugar cane and supply the factory with the required quality and quantity of cane without jeopardizing their own food crops. Furthermore, KISCOL cleared the land for out-growers who lacked necessary equipment and finances to oversee the clearing of their land. The cost will be recovered from the proceeds of the sale of the cane to the sugar mill once the mill is operational. Local staff members also go through training on matters such as environmental conservation as well as first aid for health and safety.
7. Transferable
KISCOL is an extraordinary project in that it is one of the very few Greenfield sugar cane growing and processing complexes outside an existing sugar belt. Financiers are happy to finance sugar factories between other factories in cane growing areas. However, they are reluctant to finance the whole chain from land development, cane growing development, factory construction and co-generation construction. A key concern is that it is difficult to predict the yield of the cane at harvest time. The additional investment in the bulk water supply and a sophisticated irrigation system turns the farming into an industrial type of process and has erased most of the risks involved in cultivating cane, which have helped mobilize external finance for the project. The project can be replicated where promoters go to a great effort to carry out in depth studies to ascertain that water is available for the crop during dry seasons and droughts. Furthermore, in depth soil studies should ascertain suitability of the soil for cane growing and cane transport. Promoters must also have sufficient financial capacity to bring a large percentage of the investment through equity before the lenders will release any funds for the debt side.Studies show that sugarcane grows best in coastal regions, thus proving that if the same temperatures, soil conditions and water distribution are maintained, the project can be replicated anywhere in the world. By using the sub-surface drip irrigation system, the project ensures there is continuous annual supply of water. Different cane varieties were planted on trial basis to determine the optimal ones, taking into consideration factors such as soil, water and climate. The coastal temperature proved to be suitable for cane farming. Other regions possessing similar climatic conditions would be suitable for cane farming.
8. Monitoring and evaluation
The project’s main objective is to process 3000 tonnes of cane crushed per day. The sugar is then set to be introduced to the Kenyan, Regional and International markets. During the project inception stage a budget was allocated with strict guidelines to ensure that all phases do not exceed the set budget. Timelines were also set for each of the preliminary stages of all activities including construction to ensure that the project would not lag behind on the set deadlines.Internal monitoring and evaluation is undertaken by the following teams: SOFRECO, a French consultancy firm mandated by the banks to ensure that all project milestones are achieved; JP Mukherjee and Associates, the overall project managers who have a team on site; KISCOL Project Management Office, headed by the Director-Projects with various monitoring teams such as the Project Management Team, Project Support Team, Health and Safety Office, Enviroscan, etc. The internal monitoring and evaluation teams are guided by adherence to the following indicators: Budgetary compliance; Land Clearing and planting targets; Environmental Health and Staff safety compliance and targets; Corporate Social Responsibility initiatives; and Shareholder and stakeholder responsibility matrices.


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