Museveni, MPs agree to review coffee deal


What you need to know:

The President reportedly asked MPs to support the deal, but following significant pushback by the people’s representatives, he tasked the Attorney General to address the objections

President Museveni and the ruling National Resistance Movement (NRM) party Caucus yesterday agreed to review impugned provisions of the coffee deal after legislators chorused spirited dissent on sweeteners offered to the Italian investor, among them a decade-long tax waiver and alleged market monopoly.

Attorney General Kiryowa Kiwanuka, who is the chief government legal advisor, and one of the signatories of the coffee deal with the Ms Enrica Pinetti-owned Uganda Vinci Coffee Company (UVCC), last night told this newspaper that he saw no wrong with the agreement.

“In my view, it is either the lack of information [about the deal], or the contract [with UVCC] is not well interpreted,” he said, adding: “The President said [at the Caucus] that if there is any issue, we shall look at it. But as far as I am concerned, there is no problem [with the deal].”

President Museveni, who is the NRM national chairman, summoned the Caucus for a sitting at Kololo Ceremonial Grounds yesterday to brief members on matters of national importance --- the insecurity in Karamoja sub-region, update on the military operations in eastern Democratic Republic of Congo (DRC), and the coffee deal fervently opposed by some Cabinet ministers, parliamentarians and sector players.
Agriculture minister Frank Tumwebaze, under whose docket coffee production falls, in a marked departure with conduct of official business, tweeted to notify journalists seeking information about the coffee deal to contact Finance, whose line minister Matia Kasaija counter-signed, because Agriculture knew nothing about it.

Later, the State Minister for Investment, Ms Evelyn Anite, told this newspaper that she had been in the dark, but the contract was up for review. This followed a crisis meeting chaired by Prime Minister Robinah Nabbanja in which some ministers voiced opposition to some of the provisions in the contract. 
 Since this newspaper broke the news, Buganda kingdom, notable coffee growers such as Mr Robert Kabushenga, the former chief executive of the largely state-owned Vision Group, and local coffee processors have voiced their misgivings about the deal.

It grants UVCC a decade-long tax exemption, free 25 acres of land in Namanve Industrial Park valued at $2m (Shs7.3b), cheaper electricity and water tariffs alongside other generous benefits.
It is these sweeteners that parliamentarians oppose, including at yesterday’s Caucus sitting, and are independently investigating through the House Committee on Trade and Industries.
At yesterday’s meeting, sources that attended quoted the President as impressing upon legislators the necessity to appreciate the coffee contract as essential to undergird his government’s long-held policy of value-addition and pursuing an independent and integrated economy, conceived even before he captured power in 1986.

“He (Museveni) cautioned people who debate serious matters with insufficient information and without caring to seek the correct information. He informed [caucus] members that NRM fought for socio-economic transformation of the people [of Uganda] and shall crush any obstacle that hinders it from achieving this objective,” one of the MPs said. 
At least six lawmakers described yesterday’s deliberations alternately as “heated”, “candid” and “bitter”.

The President reportedly asked MPs to support the deal, but following significant pushback by the people’s representatives, he tasked AG Kiryowa to address the objections.
Asked about the proceedings last night, the AG confirmed the difference of opinion between the Executive and Legislature, but said “as far as I am concerned, and looking at the contract, the contract doesn’t create a monopoly or exclusivity [for the Italian investor as the MPs alleged]”.
“The government position is to value-add to all our [raw] products, including coffee. We should all support the principle behind the contract; it is value-addition and creation of an independent, integrated economy,” he said by telephone yesterday evening.

One MP told this newspaper that they were forthright and informed the President respectfully that the government deal with UVCC was unpopular with majority Ugandans and the document should not be retailed as a position of the Caucus of the ruling party or Parliament.
“The general view was that the public is not happy with the agreement, especially the tax waivers and monopoly given to the Italian investors, and we asked that these should be revisited, which the President accepted,” the MP said, asking not to be named to freely discuss outcomes of what otherwise was a closed-door meeting.

However, Elgon County MP Gerald Nangoli, who represents a significant portion of coffee farmers in Uganda, said in the Caucus meeting, they presented a jointly agreed position that the deal with UVCC was bad for coffee farmers and coffee business.
“We had agreed that if the President came up with this agreement, we would reject it and, indeed, that was our position. We said it has so many loopholes and we shall not agree to have it implemented on behalf of the ordinary Ugandan,” Mr Nangoli, also the vice chairperson of Bugisu Parliamentary Caucus, said.
His Butiru County counterpart Gerald Wakooli said President Museveni spoke firmly in favour of the deal, although he failed to sway lawmakers.

“The argument he was giving us [was] why it was necessary to have this agreement implemented; that as a country we were losing a lot of money in terms of just exporting coffee in a raw material form and not as a value-added product,” he said.
Citing the export of unrefined gold for generations until the establishment of the Africa Gold Refinery in Entebbe, the President, according to the MP, said the government needed to clothe the unnecessary loss of revenues due to putting raw materials on the world market.
MP Bradon Kintu, the NRM Caucus spokesperson, revealed that a final decision on the polarising coffee deal was deferred indefinitely and a team of technocrats yet to be put in place scrutinises it and makes recommendations.

“Shockingly, the President didn’t also understand some clauses of the agreement. So, this took us a lot of time [while deliberating on it during the caucus],” he said, adding: “We have referred the agreement back and have requested the technocrats to study it very well. Everything embedded within this agreement should be in the interest of Ugandans and also to develop our economy.”
He said the “government has an interest; [so], as soon as possible, a committee will be instituted to investigate and we shall be able to come back and report on the same”.
In a separate interview, an MP, who preferred anonymity, said on the issue of tax exemptions, the President said even if UVCC didn’t pay direct taxes, it will do value-addition, create jobs, and stimulate indirect taxes by enabling the people who earn to buy goods and services that have a tax component.

In the meeting, the legislators reportedly broadly supported the objective of the agreement to increase value-addition in the coffee sector, but demanded that some of the provisions be studied further. 
The agreement inked in February, by Finance Minister Matia Kasaija and Attorney General Kiryowa on behalf of Government, granted Uganda Vinci Coffee Company Limited (UVCC), represented by Ms Enrica Pinneti, a 10-year tax exemption, and exclusive rights to market and sale of Ugandan coffee. Mr Kiryowa said interpretations are incorrect.

The deal, retailed by government officials as essential to promote value-addition to Ugandan coffee, followed the country’s surprise withdrawal from the International Coffee Organisation (ICO) early this year.
In last night’s interview, Mr Kiryowa said no incentive proffered to the Italian investor, among them excise duty and stamp duty waivers, was unavailable to Ugandan entrepreneurs.
“They just need to read the law to find out the incentives available to them,” he said, adding that the agreement does not authorise pricing of coffee prices lower than the indicative price provided by Uganda Coffee Development Authority.

On other issues

Karamoja crisis
Sources said Gen Museveni, the commander-in-chief, said the government had lain clear plans to make cattle rustling “unattractive” in Karamoja sub-region and warned Turkana raiders accused of killing Ugandan geologists and soldiers in last month’s to turn themselves in, following their surrender of the seized guns, if they did not desire to be pursued militarily. 

War on ADF
On DRC, he said Operation Shujaa launched on November 30, 2021, was progressing well and has entered the third phase involving bolstering the capacity of Congolese military, as well as regional security capabilities to respond to the threats in the east of the country. 
The UPDF, in a joint mission, launched Operation Shujaa to flush out the Allied Democratic Front (ADF) rebels, many of whom the army says it has either killed or arrested.  

Escalating commodity prices
The President added that the government would not intervene in the rising food crisis because it would be ‘fake’ economics. 

Lubowa hospital project
He also said he would investigate the cause of the delay of the Lubowa specialised hospital.