Shs179b boost to private coffee factory sparks public outcry

The budget framework approved by Parliament last week shows that the Shs60 billion was requested by the Ministry of Science, Technology, and Innovation, while the additional Shs7 billion was requisitioned by the Ministry of Energy. 

This brings to Shs179 billion the total public investment sunk into the controversial coffee venture, championed by private investor and executive director of Inspire Africa Group, Mr Nelson Tugume. 

Despite the initial completion deadline of December 2024, the factory remains unfinished, with more funds being pumped in. This has left many Ugandans questioning whether such funding is disguised to siphon taxpayers’ money without any tangible outcomes. 

The controversy mirrors past questionable expenditures in the coffee sector, including the Shs9.6 billion sunk into Inspire Africa Coffee for "teaching Ugandans how to drink coffee," which move was widely ridiculed for lacking any meaningful impact. 

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Despite resistance from Opposition MPs and the public to the additional funding to Inspire Africa, the budget was approved by the ruling National Resistance Movement (NRM) party majority MPs in Parliament. The dissenting voices said there was no legal contract or a clear profit-sharing mechanism between the government and Inspire Africa Coffee. 

Inspire Africa Coffee Company caught public attention in 2023 after revelations that the government had contracted it to train Ugandan youths on coffee consumption. 

The 2023 Auditor General’s report revealed that the Office of the Prime Minister had spent Shs1.9 billion out of Shs9.6 billion on the training. While the funds were initially intended to set up coffee shops and infrastructure to promote coffee consumption, the proposed shops in Tororo, Mbale, Lira, and Arua were never established. 

The report indicated that while Inspire Africa Coffee Company was awarded the contract to promote coffee consumption, the findings showed the training yielded little impact due to reported mismanagement of the funds. 

Despite the reservations, the government has since continued to inject more funds into the company for the establishment of a coffee factory in Ntungamo as a tertiary hub for last-mile value addition. 

Bottomless cash drain

The latest disbursement of funds follows the government’s commitment during the 2023/2024 Financial Year to establish a "Tertiary Hub for Last-Mile Coffee Value Addition" in Ntungamo District. This initiative is being implemented through the Science, Technology, and Innovation Secretariat in the Office of the President, in partnership with the Coffee Investment Consortium Uganda (CICU) and Inspire Africa Coffee. 

Mr Tugume, in an earlier interview with Monitor, said the factory is expected to produce various coffee products, including instant coffee, drip coffee, malt coffee, coffee energy drinks, and beauty cosmetics. 

Since 2023, Inspire Africa Coffee has received Shs112 billion in public funds, although some legislators believe the actual figure may be even higher. 

But Mr Joel Ssenyonyi, the Leader of the Opposition in Parliament (LoP), who recently visited the factory, raised the alarm over the absence of a clear memorandum of understanding (MoU) between the government and Inspire Africa Coffee. 

He warned that without transparency and accountability, such funding could become another avenue for misusing public resources under the guise of supporting private sector growth. 

With past reports exposing ghost coffee projects, abandoned coffee shops, and unfulfilled promises, critics argue that this could be yet another well-orchestrated scheme to divert Ugandan funds into the hands of a few, while struggling coffee farmers at the grassroots see no real benefits. 

“We visited the facility last year, and even the proprietor was not forthcoming on how much he has received so far. Our calculations bring the total, excluding this recent approval, to Shs112 billion. But it could be more since these transactions have been done secretively,” Mr Ssenyonyi said in an interview with this newspaper on Monday. 

Unclear agreement

A report Mr Ssenyonyi presented on the floor of Parliament in January after his onsite visit, revealed there was no binding MoU between the government and Inspire Africa Coffee, raising questions about the legal basis for disbursing taxpayers’ money to a private entity. 

While the factory’s proprietor claimed that a co-investment arrangement was underway, there was no clarity on whether it was a joint shareholding, a grant, or a bailout. 

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Mr Ssenyonyi asked the government to explain the nature of this relationship and urged Parliament to halt any further disbursements until a formal agreement was put in place. Nonetheless, this concern was overlooked, and instead, more funds have been pumped into the factory, whose new completion timeframe remains unclear. 

Besides the unclear partnership between the government and Inspire Africa Coffee, the exact amount of public funds injected into the venture remains unknown. 

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Mr Ssenyonyi indicated that during the site visit, the factory’s proprietor could not confirm how much money had been received, making it difficult to determine what return on investment the taxpayers can expect. 

The LoP demanded full disclosure of the funds spent and called for accountability to ensure public money is not misused under the guise of private sector support. 

In a minority report to Parliament, Mr Ssemujju Nganda, the Kira Municipality MP, raised concerns over the legality of the government's investment in the factory. 

“There is no legal relationship with this factory, yet the government has so far invested Shs112 billion. Remember, this coffee factory first received Shs37 billion in the 2023/2024 Budget and Shs75 billion in the current Budget. Now, we are allocating even more through a supplementary budget. The accounting officer of the Ministry of Science has told the Budget Committee that they are consulting the Attorney General to establish a legal relationship with this company,” Mr Ssemujju said. 

“What exists is only a memorandum of understanding, which the accounting officer promised to present to the committee,” he added. 

Meanwhile, attempts to reach out to the factory’s owner, Mr Tugume, for a comment were unsuccessful, as he did not answer our repeated calls and messages by press time. 

Bugisu, Buganda wait

The 2023 Auditor General’s report also pointed out unfulfilled government commitments under the National Development Plan III (NDP III), which had promised the construction of two modern industrial coffee factories in Bugisu and Buganda, two of Uganda’s largest coffee-growing regions. 

“With NDP III set to end and Parliament already passing NDP IV, these factories remain unbuilt, yet the government prioritised funding a private coffee project in Ntungamo,” Mr Ssenyonyi noted. 

Calls for accountability

Mr Marlon Agaba, the executive director of the Anti-Corruption Coalition Uganda (ACCU), expressed frustration over the government’s continued disbursement of large sums to private entities without visible production, job creation, or tax contributions from the beneficiaries. 

“This is not the first time funds have been allocated without any value for money. That company previously received funding to promote coffee consumption, but reports showed there was no impact. Now, the same company is receiving millions more. Meanwhile, many Ugandan companies that have been engaged in coffee value addition for years are struggling without any support,” Mr. Agaba said. 

“So, we are wondering what is so special about this facility? We have not seen any value coming from it. There is no equity share transfer to the government or Ugandans,” he added. 

President Museveni visited the facility last year and was reportedly pleased with the progress at the time, which was estimated at 60 percent. The factory was initially slated for completion by December 2024.

However, legislators are now questioning why more funds continue to be allocated to a project that lacks a formal legal contract with the government. 

Mr Robert Kabushenga, one of the outspoken coffee farmers in the country, called the funding to Inspire Africa a “scam.” 

“I will simply repeat what I told you at this time in 2023 and 2024. This is a scam. The purpose is to extract money from the Treasury for personal gain. The effect is to steal the future of young Ugandans. It is not about coffee. Otherwise, we would be supporting those who produce it… ,”he wrote on his X handle. 

Mr Kabushenga indicated that the arrears of nursery operators whose amounts are much less have not been paid and the farmers are struggling to access planting materials. 

“I can go on. The insult added to this injury was delivered in the dismantling of UCDA [Uganda Coffee Development Authority], the only outfit that served coffee farmers and replaced it with nothing. It has given free rein to con artists,” he said. 

Mr Kabushenga criticised the spending of the chunk of Shs60b that he said would be spent on Tanzanian musician, and an American actor. He said more sums would be spent on organising a marathon in Ntungamo. 

“Then the bulk will be blown on another joke they are calling a coffee festival. Some more will be thrown away on endless foreign travels. The rest will vanish into private accounts. If it hasn’t already,” he warned. 

He wondered why the government continues to fund private entities and abandon the government ones. 

Government responds

By yesterday, Dr Monica Musenero, the Minister of Science, Technology, and Innovation, said she had just returned to office and was in the process of getting a briefing on recent developments. 

However, Dr Chris Baryomunsi, the ICT minister and government spokesperson, told Monitor that a memorandum of understanding between the government and Inspire Africa Coffee does exist. 

He said the Attorney General’s office was finalising a legal instrument that would allow the government to acquire shares in the factory. However, he did not disclose the percentage of shares the government would own. 

“Regardless, there is nothing wrong with the government making strategic interventions to support the private sector. This happens everywhere in the world. In this case, the government has been promoting agro-processing and value addition, and Inspire Africa Coffee has established a facility to add value to coffee, which is a strategic crop for Uganda,” Mr Baryomunsi said. 

“By supporting this initiative, we shall process our coffee locally and fetch higher revenues instead of selling raw coffee. There is nothing wrong with that,” he added. 

Uganda is currently Africa’s leading coffee exporter and the second-largest coffee producer on the continent, having exported 6.13 million bags in the 2023/2024 financial year, valued at $1.14 billion. 

Requests for Shs67b

“The funds are for completion of standards and certifications, working capital to enable purchase of coffee from farmers, operational funds for running the coffee processing hub, and marketing and branding,” the supplementary framework states in part. 

Additionally, the Ministry of Energy has requested Shs7 billion for the construction of a dedicated power line in Ntungamo to provide reliable power to Inspire Africa Coffee Factory and H5 Tin Factory. 

The ministry said the power line would source its supply from the Mirama Hills substation and would be completed within six months. 

On coffee consumption 

Inspire Africa Coffee Company caught public attention in 2023 after revelations that the government had contracted it to train Ugandan youths on coffee consumption.

The 2023 Auditor General’s report revealed that the Office of the Prime Minister had spent Shs1.9 billion out of Shs9.6 billion on the training.