BAT closes factory in Uganda - Daily Monitor

BAT closes factory in Uganda

Friday June 21 2013

The British American Tobacco - Uganda is closing its tobacco-processing plant in Kampala. PHOTO /  FILE

The British American Tobacco - Uganda is closing its tobacco-processing plant in Kampala. PHOTO / FILE 

By Nelson Wesonga & Tabu Butagira

KAMPALA- The British American Tobacco - Uganda is closing its tobacco-processing plant in Kampala, rendering at least 26 employees jobless immediately and hundreds others uncertain.

The company is switching its manufacturing operations to Kenya as it de-commissions the 74-year-old factory, officials confirmed last evening.

Affected staff members are those directly working in the Green Leaf Threshing Plant, the factory’s official name.

Ms Diana Apio Kasyate, the corporate and regulatory affairs manager, said: “Our leaf growing and cigarrete marketing and distribution operations are not affected by this change”.

“We will continue to focus our resources on marketing our brands to adult consumers, growing a high quality tobacco crop, and improving farmers’ capacity and scale,” she noted in a statement.

BAT officials, including managing director Jonathan D’Souza, met Trade minister Amelia Kyambadde on Wednesday but it remained unclear if she was briefed about the factory closure.

Our investigations show that the tobacco-processing machinery on Jinja Road, next to the Ministry of Internal Affairs headquarters, had become old and installing a new one would cost $75m, investment company executives deemed unnecessarily costly when BAT, the parent company, has an alternative plant in neighbouring Kenya.

Investing in a $75m plant would not have also made economic sense because it has an installed capacity to process 50 million kilogrammes of tobacco each year yet BAT on average buys 15 million kilogrammes annually, according to sources.

The firm’s board, after a meeting yesterday, addressed staff members to break news about the restructuring, which took them by surprise.
It remained unclear if BAT would also shut down its upcountry silos in Arua and Hoima, which act as centralised outposts for buying, grading, sorting and doing a mini-processing of tobacco.

Officials were still reviewing the full impact of yesterday’s decision on the firm’s future operations and the way forward amid a flood of unresolved staff concerns.

Mr D’Souza told this newspaper on Tuesday that BAT is “definitely not leaving” as rumour swirled that the company, in Uganda since the 1930s, was mulling an exit.

Ms Apio noted that the location of the Ugandan tobacco plant --- close to the central business district – is “restrictive and no longer suitable for our crop processing operations.”

Environmentalists have previously faulted BAT over air pollution and the factory neighbours also complained over inhalation of discomforting tobacco smell.

BAT this year contracted 17, 000 tobacco growers countrywide, who have just entered the phase of selling leaf, and disbursed Shs14b worth in farm inputs and cash loans.The firm said the shutdown of its factory is unlikely to affect its tax contribution which last year stood at Shs72b.

Health advocates and environmentalists have, among other things, blamed tobacco firms for rapid soil degradation through excessive use of chemical fertilisers; deforestation for leaf curing; encouraging child labour on farms and the rise in tobacco-related diseases. Parliament is considering a draft law that outlines stringent measures of production and sale of tobacco products, making it hostile and riskier to invest in the sector.

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