President Museveni has rejected calls to reduce taxes as a measure to contain the rising commodity prices.
Delivering his State of the Nation Address at Kololo Ceremonial Grounds in Kampala on Tuesday, June 7, 2022, the President said it would be suicidal to lower the prices since it would affect service delivery.
Instead, he said, his government is engaging the global actors that have caused the shortages of many products, whilst working to increase domestic production.
“Instead, we are doing two things. One, is to engage the global actors that have caused these artificial shortages. I have contacted some of the actors. I am glad H.E. Biden is going to Saudi Arabia, to meet the Crown Prince to get OPEC to pump more petroleum out of the ground. That would definitely help,” he said.
“Also, the Chairperson of the AU, H.E. Mack Sall, met H.E. Putin in Sochi, Russia to ask him to assist in getting the wheat of Ukraine out of the Ports of Odessa and he has also talked to the Europeans to stop sanctioning wheat from Russia and fertilizers because Africa needs them. This is one of the correct ways,” he added.
The President said the other one, is “to get our own substitutes – cassava and banana flour for bread and our own sunflower, soya beans oil as we wait for our more quantities of Palm Oil from Sango Bay, Mayuge, Buvuma, Maruzi, Bundibugyo, etc.”
“Cutting taxes or subsidies, especially on imports, is suicidal because our people may buy carelessly and we end up draining our forex reserves,” he added.
He also spoke about the role of Italian investor Enricca Pinetti in the controversial coffee deal.
Mr Museveni lashed at his critics whom he said have not responded to his call to develop Uganda’s coffee sector and are instead interested in seeing the country lose its coffee to foreigners.
He said he had tried many times to get investors in the coffee sector in vain.
“Ever since 1986, I have been trying to get value adders to all our raw materials. Sometimes I succeeded with milk (Sameer, Brookside, Pearl, Kagate, etc.), Cotton (Nytil, Fine Spinners), wood (plywood in Katuugo), Palm Oil (Bidco, etc.), sugar (many companies), Petroleum (Refinery), Bananas (Dr. Muranga, Kyamuhangyire, etc.), Skins and Hides (Nakyobe), Gold (six refineries), etc,” he said.
“With coffee, I tried so many groups – Nescafe, Nestle, Tata, Bancafe (Banya), Star Coffee (Tz-Bukoba), to no avail,” he added.
Mr Museveni revealed that he approached Pinetti, he realized that she had no idea about coffee but that he had a wealth of contacts.
“When I met Madame Pinetti, she had no idea about coffee. I, however, could see that she had a wide network of contacts. I asked her to look into the coffee. After some time, she came back with a positive report that it was doable,” he said.
“Therefore, those attacking that project, are supporters of okukenenula, (ekyejwiiso) of Africa – perpetual bleeding. If they were not, they would have responded to our call of 1986 and after, to come forward and add value to coffee and seek government assistance,” he added.
The President’s remarks come after Parliament recommended the termination of the coffee agreement government signed with Pinetti’s Vinci Coffee Company.
The House based their decision on mainly three major reasons; the deal contravened multiple sections of law; the company doesn’t have financial capacity to undertake the project, and lacks a valid investment licence. The House heard that the company’s investment licence issued in 2014 expired and was not renewed in 2019.
In the deal, the government had waived all taxes including social security contributions for company employees; offered free land, water, electricity, monopoly for premium quality coffee and the powers to determine prices and limited licensing of coffee exporters until the company meets its demand which is unlimited.
But on Tuesday, Museveni said, “it is criminal for anybody to continue arguing for the continued export of raw materials in Africa when there is 90% more value in that product that you are giving to outsiders.”