By Benadeta Mwaura - Reporter
Kenya, August 20, 2026 - Co-operative Bank has moved to exercise its statutory power of sale over property belonging to South Nyanza Sugar Company (Sony Sugar) after the miller defaulted on a loan now standing at more than KSh862 million.
The bank says Sony Sugar owed KSh862,328,980.41 as of July 14, 2026, arising from a credit facility extended to the company. The facility was secured, among other securities, by a legal charge over L.R. No. 16339/1 and a first-ranking All Asset Debenture in favour of the bank.
Co-operative Bank has given the sugar company 40 days to clear the outstanding amount or otherwise rectify the default before the lender exercises its statutory power of sale over the property.
The move follows an earlier 90-day statutory demand notice issued on August 13, 2025, which the bank says did not result in the default being resolved.
The proposed sale has triggered concern in the sugar-growing region because the property is understood to form part of Sony Sugar's nucleus estate, land that is central to the company's sugarcane operations.
Farmers and local leaders have raised concerns that losing the land could have consequences beyond the company's balance sheet, particularly for sugarcane production and livelihoods in the surrounding communities.
Reports indicate that the estate covers more than 4,000 acres, with farmers warning that its sale could affect the wider sugar industry in the region.
The concern is particularly significant because Sony Sugar is not simply a private commercial property owner. Its operations are linked to thousands of farmers who supply cane to the miller and depend on the company for a market for their crop.
The planned sale has since attracted government intervention.
Awendo MP Walter Owino said the National Treasury had taken action following public concern over the 40-day auction notice, with the government seeking to safeguard Sony Sugar's assets and protect livelihoods dependent on the miller.
The intervention changes the immediate outlook of the dispute, although the underlying debt owed to Co-operative Bank remains.
The bank's notice makes clear that it retains the right to enforce its security unless the default and outstanding balances are addressed through an acceptable arrangement.
More from Kenya
The dispute highlights the financial pressures facing Kenya's sugar industry, where government-owned and government-linked millers have repeatedly struggled with debt, operational challenges and the cost of maintaining production.
For Sony Sugar, the immediate issue is how to resolve the KSh862.3 million liability without putting critical operating assets at risk.
For farmers, the concern is what would happen to cane deliveries if the company loses land that supports its own production and wider milling operations.
The dispute also comes after Sony Sugar was involved in a government-backed effort to bring private-sector management into its operations. The company was leased to Busia Sugar Company Limited in 2025, a move intended to improve its operations and financial performance.
That makes the current debt dispute particularly sensitive: the government is simultaneously seeking to revive the sugar miller while dealing with a lender's attempt to enforce its security over company property.
For Co-operative Bank, the issue is straightforward, a borrower has defaulted on a secured facility and the lender is seeking to recover money owed.
For the government and farmers, however, the land represents an asset tied to food production, employment and the survival of a major regional sugar miller.
The immediate question is therefore no longer simply whether Co-operative Bank can sell the property, but how Sony Sugar's KSh862 million debt will be settled without putting the land and livelihoods tied to the miller at risk.