Kampala, Uganda | THE INDEPENDENT | The Uganda Coffee Development Authority (UCDA) has thrown its weight behind the controversial agreement between the government and the Uganda Vinci Coffee Company Limited.
While appearing before the Trade Committee of Parliament that is probing the agreement on Tuesday, the UCDA Executive Director, Emmanuel Iyamulemye said it neither contravenes the Coffee Act nor any other laws of the country.
The Finance Ministry Permanent Secretary, Ramathan Ggoobi signed the controversial coffee agreement with Enrica Pinetti, the Uganda Vinci Coffee Company Limited Board Chairperson on February 10th, 2022.
According to the agreement, the government gave Uganda Vinci Coffee Company Limited free land in the Industrial and Business Park at Namanve measuring 27 acres after indicating its capability to establish a coffee processing facility in Kampala.
The agreement also gives the company exclusive rights to buy all of Uganda’s coffee and its concession will end in 2032 but is subject to renewal. The agreement also exempts the Vinci Coffee Company from paying Income tax, Pay As You Earn, Excise duty, and remitting NSSF contributions. The document also provides a 5 percent subsidy on electricity for the company.
However, a number of people involved in the coffee business including farmers, exporters, processors and opposition legislators have contested the agreement and described it as a bad deal. The Shadow Minister of Agriculture, Abed Bwanika says the agreement contravenes the Constitution and Section 52 of the National Coffee Act, 2012, which mandates the Uganda Coffee Development Authority to determine coffee prices.
However, Iyamulemye says the agreement would help Uganda generate more money from selling processed coffee, and create job opportunities among other benefits. He notes that the deal is good for Uganda since it will also check on the global prices, adding that unprocessed coffee beans are susceptible to price fluctuations.
“We foresee rising competitiveness of Uganda coffee. The sale of coffee is one of the fastest-growing segments globally and Uganda could capture some of this market through in-country production. The global coffee market is expected to grow by 5.4 percent,” he added. Iyamulemye also said UCDA had not yet licensed the Vinci Company to start its operations.
Cecilia Ogwal, the Dokolo Woman MP accused Iyamulemye of lying to the committee that the agreement doesn’t contravene Ugandan laws. She demanded that he takes an oath before making more submissions to the committee.
However, the committee chairperson Mwine Mpaka interjected, saying UCDA was just presenting its opinion and not stating facts. But Mpaka later dismissed Iyamulemye’s opinion noting that it had been ‘dishonourably discharged.’
In a separate interface with the committee, Francis Gimara, the former president of the Uganda Law Society (ULS) dismissed the agreement, saying that the Minister of Finance had no legal powers to offer the incentives. Gimara, who was offering a legal opinion on the coffee agreement, said that where Parliament has enacted a law, every government entity is obliged to abide.
The Minister of Finance, Matia Kasaija and the Secretary to Treasury Ramathan Ggoobi did not appear before the committee as scheduled. This angered Mpaka who accused Kasaija of failing to explain the agreement to the committee and going in with other business in parliament.