President Museveni and the ruling National Resistance Movement (NRM) party Caucus agreed yesterday to review the coffee deal’s disputed provisions after legislators expressed outrage over sweeteners offered to the Italian investor, including a decade-long tax exemption and an alleged market monopoly.
Attorney General Kiryowa Kiwanuka, the government’s top legal adviser and a signatory to the coffee transaction with Ms Enrica Pinetti’s Uganda Vinci Coffee Company (UVCC), told this newspaper last night that he found no flaws in the deal.
“In my opinion, either there is a lack of knowledge [about the agreement] or the contract [with UVCC] is poorly understood,” he said, adding, “The President stated [at the Caucus] that if there is any difficulty, we will look into it.” But there is no difficulty [with the sale] as far as I’m concerned.”
President Museveni, who is also the National Resistance Movement’s (NRM) national chairman, called a meeting of the Caucus at Kololo Ceremonial Grounds yesterday to brief members on issues of national importance, including insecurity in the Karamoja sub-region, an update on military operations in eastern Democratic Republic of Congo (DRC), and the coffee deal, which has been fiercely opposed by some Cabinet ministers, parliamentarians, and sector players.
Agriculture minister Frank Tumwebaze, whose portfolio includes coffee production, took to Twitter to advise journalists wanting information on the coffee deal to contact Finance, whose line minister Matia Kasaija counter-signed it, because Agriculture had no knowledge of it.
Ms Evelyn Anite, the State Minister for Investment, later told this newspaper that she had been unaware of the contract’s status, but that it was up for review.
This came after a crisis meeting presided over by Prime Minister Robinah Nabbanja, during which some ministers expressed opposition to some of the contract’s conditions.
Since this publication published the story, the Buganda monarchy, important coffee producers like Mr. Robert Kabushenga, the former CEO of the largely state-owned Vision Group, and local coffee processors have all expressed their support.
It provides UVCC with a ten-year tax exemption, a free 25-acre plot of land in Namanve Industrial Park worth at $2 million (Shs7.3 billion), and lower power and water rates, among other incentives.
Parliamentarians dislike these incentives, as evidenced by yesterday’s Caucus meeting, and the House Committee on Trade and Industries is studying them independently.
According to sources who attended yesterday’s meeting, the President emphasized to legislators the importance of appreciating the coffee contract in order to support his government’s long-standing policy of value-adding and pursuing an independent and integrated economy, which began even before he came to power in 1986.
“He (Museveni) warned those who argue major issues with limited information and who do not care to obtain the correct information,” he said.
One of the MPs added, “He informed [caucus] members that NRM battled for socioeconomic transformation of the people [of Uganda] and will destroy any impediment that stands in the way of attaining this goal.”
At least six legislators described yesterday’s discussions as “heated,” “frank,” and “bitter.”
The President reportedly asked MPs to endorse the agreement, but after strong opposition from the people’s representatives, he assigned Attorney General Kiryowa to handle the concerns.
When asked about the proceedings last night, the AG acknowledged that the Executive and Legislature hold opposing viewpoints, but said that “as far as I’m concerned, and looking at the deal, the contract does not provide a monopoly or exclusivity [for the Italian investor], as the MPs claimed].”
“The government’s attitude is that all of our products, including coffee, should be value-added. We should all embrace the contract’s premise of value addition and the building of a self-contained, integrated economy,” he added by phone yesterday evening.
According to one MP, they were straightforward and respectfully advised the President that the government’s pact with UVCC was unpopular with the majority of Ugandans and that the document should not be marketed as a view of the Caucus of the House of Representatives.
“The general view was that the public is unhappy with the agreement, particularly the tax waivers and monopoly granted to Italian investors, and we requested that these be revisited, which the President agreed to,” the MP said, declining to be identified in order to freely discuss the outcomes of what was otherwise a closed-door meeting.
In the Caucus meeting, however, Elgon County MP Gerald Nangoli, who represents a substantial chunk of Uganda’s coffee farmers, claimed they presented a jointly agreed stance that the UVCC contract was harmful for coffee farmers and the coffee business.
“We had agreed that if the President proposed this arrangement, we would reject it, and that is exactly what we did. Mr Nangoli, who is also the vice chairperson of the Bugisu Parliamentary Caucus, stated, “It contains so many loopholes that we will not agree to have it implemented on behalf of the common Ugandan.”
President Museveni spoke strongly in favor of the arrangement, according to Gerald Wakooli of Butiru County, however he was unable to persuade MPs.
“The point he was making to us [was] why this agreement was vital; that as a country, we were losing a lot of money by just exporting coffee as a raw material and not as a value-added product,” he said.
According to the MP, the President cited the export of unrefined gold for generations until the construction of the Africa Gold Refinery in Entebbe, saying the government needed to compensate for the wasteful loss of money caused by putting raw commodities on the world market.
The NRM Caucus spokesperson, MP Bradon Kintu, disclosed that a final decision on the divisive coffee contract has been postponed indefinitely while a team of technocrats scrutinizes it and provides recommendations.
“Surprisingly, the President did not understand several of the agreement’s clauses.” “We have referred the agreement back and requested the technocrats to review it very thoroughly,” he added, adding, “So, this took us a long time [when deliberating on it during the caucus].”
Everything in this deal should be in Ugandans’ best interests as well as the development of our economy.”
“The government is interested,” he continued, “so a committee will be established as soon as possible to investigate, and we will be able to come back and report on the same.”
In a second interview, an MP who requested anonymity said that the President said that even if UVCC did not pay direct taxes, it would generate value, create jobs, and stimulate indirect taxes by allowing individuals who earn to buy goods and services with a tax component.
The legislators apparently agreed to the agreement’s goal of increasing value-added in the coffee sector, but requested that it be implemented.
Uganda Vinci Coffee Company Limited (UVCC), represented by Ms Enrica Pinneti, received a 10-year tax exemption and exclusive rights to market and sell Ugandan coffee under a deal signed in February by Finance Minister Matia Kasaija and Attorney General Kiryowa on behalf of the government. Mr. Kiryowa asserted that the interpretations are wrong.
The agreement, marketed by government officials as necessary to enhance Ugandan coffee’s value addition, came after the country’s unexpected exit from the International Coffee Organization (ICO) earlier this year.
Mr Kiryowa said in an interview last night that no incentive granted to the Italian investor, such as excise duty and stamp duty waivers, was available to Ugandan businesspeople.
“All they have to do is study the law to find out what incentives are available to them,” he said, adding that the agreement prohibits coffee prices from falling below the Uganda Coffee Development Authority’s indicated price.
Concerning other matters
Crisis in Karamoja
According to sources, Uganda’s commander-in-chief, Gen. Yoweri Museveni, stated that the government had laid out clear plans to make cattle rustling “unattractive” in the Karamoja sub-region, and warned Turkana raiders accused of killing Ugandan geologists and soldiers last month to turn themselves in after surrendering the seized guns if they did not want to be pursued militarily.
The ADF is under attack.
On the Democratic Republic of the Congo, he said Operation Shujaa, which began on November 30, 2021, was moving well and had entered the third phase, which involved building Congolese military and regional security capacities to respond to threats in the country’s east.
Operation Shujaa was initiated by the UPDF as part of a collaborative campaign to flush out Allied Democratic Front (ADF) rebels, many of whom the army claims it has killed or detained.
Commodity prices are rising.
The President went on to say that the government will not interfere in the escalating food crisis because it would be “false” economics to do so.
Project for a hospital in Lubowa
He also stated that he will look into the reason for the Lubowa specialized hospital’s delay.