Finance ministry defends coffee deal with Italian investor amid public backlash

Ministry of Finance PS Ramathan Ggoobi (PHOTO /Courtesy)

The Ministry of Finance, Planning and Economic Development has insisted that the coffee agreement signed with the Italian investor is meant to improve Uganda’s coffee sub-sector and not create a monopoly.

Addressing journalists on the backdrop of public concerns on why the Agriculture ministry was not involved in the signing of the deal, Finance Ministry Permanent Secretary Ramathan Ggoobi said the agreement was cleared by Attorney General’s Chambers and seeks to create the 1st final product coffee processing plant in Uganda at $80 million.

He said the Coffee plant will utilize only about 6.4% of Uganda’s coffee production initially and 5% at full capacity when production moves from 420,000 tons to 1.2 million tons.

Under the coffee deal signed in February, Uganda Vinci Coffee Company Limited (UVCC) will enjoy exemption in regard to Import Duties, Value Added Tax, Excise Duty, Stamp Duty, Corporate Income Tax and employment-related taxes, as well as any other tax or imposition levied or charged under the laws or any other laws that may be enacted.

A 49-year lease agreement has also been signed with UVCC. The agreement, however, gives the company carte blanche to “use the land for all purposes it deems fit in relation to the project.”

But Ggoobi explained that this does not give the company monopoly over all Uganda’s coffee exports or purchases.

He said Uganda Vinci will pay for superior quality coffee beans at a premium price which will be determined transparently and not lower than price approved by Uganda Coffee Development Authority (UCDA).

The Secretary to Treasury also said exports of green coffee will continue and will be determined by market forces of demand and supply.

He said the Incentives given to UVCC are provided to investors by law and any person in same business can get similar benefits.

Affordable electricity at not more than USD 5 cents is in line with current policy of promoting manufacturing under import replacement and export promotion strategies. Exporters of fabrics made in Uganda and manufacturers in industrial parks have this subsidy, he said.

On Tuesday, it emerged that House Speaker Anita Among had directed the Parliament Committee on Trade Tourism and Industry to probe the contentious coffee agreement signed between Government and Uganda Vinci Coffee Company Limited, a privately owned firm with a controversial director to process and export Uganda’s coffee.

Finance Minister Matia Kasaija signed the deal on behalf of government while Enrica Pinetti signed on behalf of UVCCL in February, this year.

Ms Pinetti is the individual behind the planned multi-million dollar International Specialised Hospital, whose construction has failed to lift off the ground two years after the government guaranteed $379 million (Shs1.4 trillion) for the project.

Opposition lawmakers led by Shadow Agriculture Minister, Ms Abed Bwanika, have separately questioned the deal’s legality insisting that it was not entered into without the involvement of Parliament and the Attorney General.

In a series of tweets on Thursday, Agriculture Minister Frank Tumwebaze, under whose docket coffee production and processing falls, noted that neither he nor ministry was privy to the agreement.

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