Giving one person exclusive coffee rights is corruption, theft – Nandala

Ugandans are up in arms because of the agreement signed between government and Uganda Vinci Coffee Company Ltd. What could be forming this anger and is it justified?

I think it is Bugisu Cooperative Union (BCU) which raised the issue first and said “this agreement is letting the public to be misled because Uganda government does not have its own coffee that it can make a contract with”. In short, it is like somebody making a contract for something he doesn’t own. The people who own coffee are the farmers and they are afraid they are going to be coerced to be slaves for this so-called company of the Italians.

So we are saying it is a bad deal for the poor farmers. The coffee farmers should be angry. In fact, the whole country should be angry. If today they have gone for coffee, tomorrow they will go for cotton, another day they will go for potatoes and the other day they will go  for grass. We must stop this thing in its earliest form so that in future nobody should enter an agreement where he has no shares.

Government says Uganda Vinci will pay for best coffee beans at premium price. Isn’t this cause for farmers to celebrate?

I want to start with exemptions. They say people will not pay for NSSF [National Social Security Fund]. That means that there is no Act of NSSF which exempts employees not paying NSSF or employers. It means the ministry of Finance is going to draw a budget and bring it to Parliament to pay NSSF on behalf of the employees of that company. In short, the taxpayer will foot that bill. 

No tax exemptions means [that] Ministry of Finance has no powers to exempt anybody from tax. That means they will come to Parliament, appropriate money for taxes to pay for that company. It is the taxpayer who will be paying the money. 

Umeme has a fixed rate of how they charge their unit, there is no way a government will say ‘this is a private company, charge them this rate’. No. Umeme will charge the full rate. It means they come to Parliament, get a difference of electricity to be paid to Umeme. In short, this agreement is not affecting only coffee farmers but it is affecting the entire population.

All the taxes, all the NSSF, all the Umeme bills will be paid by the Ugandan taxpayer. So there is no premium price. If anybody is to talk about premium price, it is important that government does marketing for people. And how does government do this? Like Rwanda government did, it went to American and sourced Abacus. It went to the UK market. The president of Rwanda sent a jet to pick the president of Costa Rica.

That is why coffee of Rwanda is in those markets and is being charged at a high premium. Currently, they say Bugisu AA is extinct and yet it is there. They are using our coffee to brand other coffees like Robusta, Paida and Kasese. For us as Bugisu Cooperative Union we have been fighting. That is why in 2010, they came for us. 

If you are to bring Coffee Marketing Board back, you don’t bring it with those. It cannot be run by Italians. In short, we are exporting our jobs. We are externalising our money. Remember, coffee is the second traded commodity after oil in the whole world. Now we are getting our only product which is the highest exchange earner and giving it to an Italian. 

Another fear being raised is monopoly by Uganda Vinci. But ministry of Finance Permanent Secretary Ramathan Ggoobi says the plant is going to utilise only 6.4 per cent of the Uganda coffee production. Is this enough to allay fears that the sector has been mortgaged to foreigners?

If it is 6.4 per cent, why don’t they allow the same person to also compete like others? Why do you give her all the exceptions? [If you mean good for Ugandans], [then] go to cooperatives and say we [government] are going to pay NSSF; we are going to get you loan guarantees on all your equipment. We in Bugisu Cooperative Union, for example, do grounded coffee at Elgon Pride [Coffee]. That Elgon Pride is being done by a small machine. But if we got a bigger machine, we would do it [better]. 

There is nothing big that cannot be done by local firms. Why do you do value addition by bringing foreigners and giving them exceptions? Give them to Ugandans or [empower our entities] like Coffee Marketing Board in Bugolobi.

That place was meant to be a turn-key. [But] they closed it. If they had left it [to work], [considering] the equipment it had brought [into the country] was the best line in Africa, in fact, in the whole world. We were going to do what was equivalent to Nescafé. In fact, it was going to be better than Nescafé. The Nescafé we take is very bitter because those are husks. But if you tasted our coffee, like from Bugisu, it is smooth. It is the best and if you take it, you don’t need sugar. 

So now, they should come back and be asked a question, why did you close Coffee Marketing Board? When you closed it, where did that equipment go?

This saga comes hot on the heels of government withdrawing from the International Coffee Organisation (ICO), a move they say was meant to arm-twist ICO into giving Uganda favourable terms. Was the withdrawal then such a bad gesture?

The International Coffee Organisation is neither a regulator nor a quality controller. It was supposed to be there to bring all players; the businessmen, producers and the roasters [together]. Unfortunately, it turned out to be a drinking joint. In my view that is not the issue because it was even suggesting that they [businessmen] allows defects. That means the big players like Ethiopia and Brazil would be allowed to sell coffee with defects while for us in Uganda we sell defect-free coffee. 

What they [government leaders] would have done for us is basically find market and also get roasters and we make money. Roasters are all over, but you cannot go like you are taking matooke in the market to sell. With coffee you must go, sit down, negotiate, they taste your factory, they do everything and give you a deal. For us, that can only be done by government. 

Leaving ICO has no problem, even America left, German left and I don’t know why. But this contract you are seeing had nothing to do with ICO. The problem which we are having [is] that not everybody is in the know. I heard my brother [Finance minister Matia] Kasaija saying Agriculture should not know, but coffee is an agricultural product.

You cannot talk about it without talking of Ministry of Trade, UCDA [Uganda Coffee Development Authority]. 

In fact, they are doing the agreement against the Coffee Act we [Parliament] have just passed. So, this is just criminality. The moment you bring in monopoly, then you are giving one person exclusive rights. Even if 10 percent or 1 percent, then all you are saying [is] she will be first be given coffee which must be exported. That means she must get first. You will not be given a licence to export until she has got her coffee. That is terrible. She would determine her own price. It is like a monopoly. You are at the mercy of the monopolist who is running the business. 

I want to meet [Mr] Ggoobi, I am an economist, he must explain to me, in a sector where one potion has a monopoly and another section is open. I want him to explain how there will be real forces of demand and supply to determine the price equilibrium.

That is simple economics. If it is open, let it be open. And if it is closed, let it be closed. But you don’t bring one to have some [exclusive] rights against others. That means that is corruption. That is theft.

Uganda is currently Africa’s biggest coffee exporter, exporting 6.7 million bags last year. What should be done so that we export more and farmers get the best prices?

By the way we export more than that. Coffee goes to Rwanda through Kabale, coffee goes to Zaire through Lwakhakha and Busia. Coffee goes to [Democratic Republic of] Congo through Kasese. It means they have to use those countries to export their coffee. Those countries are exporting coffee more because their government is involved. How can we do it better?

Government should be there to look for markets. Marketing is the most expensive item in the whole business [chain]. To advertise is marketing. You cannot tell me that Bugisu Cooperative Union has the capacity to advertise in the Financial Times, it is only government which can do it. If government wanted us to export more and bring more prices for our farmers, it should lead. It should have a budget for marketing and advertising, among others. 

View. . . Empower local firms  
There is nothing big that cannot be done by local firms. Why do you do value addition by bringing foreigners and giving them exceptions? Give them to Ugandans or [empower our entities] like Coffee Marketing Board in Bugolobi.

That place was meant to be a turn-key. [But] they closed it. If they had left it [to work], [considering] the equipment it had brought [into the country] was the best line in Africa, in fact, in the whole world. We were going to do what was equivalent to Nescafé. In fact, it was going to be better than Nescafé.’’

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