Finance ministry defends controversial coffee deal

Ministry of Finance Permanent Secretary, Ramathan Ggoobi, said the Attorney General cleared the agreement. PHOTO/ISAAC KASAMANI

What you need to know:

  • Government signed an agreement with UVCC, a privately owned firm, to process and export Uganda’s coffee

The Ministry of Finance, Planning and Economic Development has defended a coffee deal with an Italian investor saying the agreement was sanctioned by the Attorney General and no single law was violated.
Finance minister Matia Kasaija signed on behalf of the government, while Ms Enrica Pinetti signed on behalf of Uganda Vinci Coffee Company Limited (UVCC), the company at the centre of controversy.

Ministry of Finance Permanent Secretary Ramathan Ggoobi yesterday said the Attorney General cleared the agreement.
“This agreement was signed following a protracted process of visibility and due diligence. It was way back in 2015. The agreement was cleared by the Attorney General and it is within the laws governing the country. No single law was broken,” Mr Ggoobi said yesterday.

Government signed an agreement with UVCC, a privately owned firm, to process and export Uganda’s coffee.
Ms Pinetti is the individual behind the multi-million dollar construction of the International Specialised Hospital, which is more than two years behind deadline despite the $379 million (about Shs1.4 trillion) backing from government.  
Ms Pinetti’s firm, according to the secret agreement, whose details have since been leaked to the public, will be exempted from paying import duties, value-added taxes, excise duty, stamp duty and corporate income tax, among others. 
 
Several legislators have protested the agreement saying that it gives monopoly to the UVCC. PS Ggoobi denied that they have created a monopoly since the Ugandan laws don’t allow such a creation, saying that the company will only utilise 6.5 per cent of coffee produced in Uganda.
“I have heard people say that you are creating a monopoly. How can you create a monopoly when the plant is going to utilise only 6.4 per cent of the Uganda coffee production? At peak, they will use 5 per cent,” he said.

Incentives
He said the company will deal in value addition to the coffee, which hasn’t been done before in Uganda.
He explained the incentives that were provided to the company are given to any investor in the country.
“Government undertook reasonable steps to ensure that Uganda Vinci has access to quality beans for processing into fine products. It will be unconceivable for Uganda Vinci to set up shop and not provide it with some comfort for it to access the raw materials required. Government has banned used batteries in the past, iron scrap, so that they can provide raw materials for battery and steel manufacturers,” he said.

During the period, the government pledges support in the form of non-precedent concessions that in essence mean the investor will not be eligible to pay any form of tax from project commencement.
“[UVCC] shall be entitled to all tax exemptions available under the laws of Uganda. [These] shall extend to taxes and impositions applicable to all the activities of the company and its foreign staff in respect to the export of green coffee beans,” a clause in the agreement states.

He said the company will pay for the best coffee beans at the premium price that will be transparently determined and will not be lower than the price approved by the Uganda Coffee Development Authority.  

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