“It is the best deal ever”- Finance Ministry defends controversial coffee agreement

The Ministry of Finance has defended the deal  that government signed with an Italian company  to export Uganda’s coffee.

Government recently signed a deal with Uganda Vinci Coffee Company Limited  to establish a coffee processing plant at Namanve industrial park where  which Italian businesswoman Enrica Pinetti signed on behalf of the company.

Pinetti was involved in the deal for the constriction of Lubowa International Specialized Hospital but the same has since stalled.

Several members of the public, especially those involved in the coffee sector have since protested against the “bad” deal.

Commenting about the matter on Thursday, Ministry of Finance Permanent Secretary, Ramathan Ggoobi defended the deal as one of the best the country can ever get.

“The agreement was signed with  Uganda Vinci Coffee Company Limited   to assist in the development of an 80million dollar plant, add value to coffee and export it globally. The agreement was therefore signed following a protracted process of due diligence and feasibility studies,”Ggoobi said.

To further defend the agreement, the Ministry of Finance Permanent Secretary said the deal was cleared by the Attorney General and was subsequently signed within laws governing the country and that none was broken.

Explaining about the agreement, Ggoobi explained that the agreement will support government in the realization of its coffee production target from the current 7 million bags per year to 20 million bags by 2030.

“The agreement is going to create an additional of value on 60,000 tons of coffee a year at full capacity starting with 27000 metric tons in first year ,”he said.

Monopoly

The deal has been described by many, especially in the coffee sector as a monopoly on Ugandan coffee trade and export with tax exemptions on top of funding from government.

Addressing journalists on Thursday, the Ministry of Finance Permanent Secretary dismissed the same saying there is nothing like a monopoly.

“How can a monopoly be created when the plant is to utilize only 6.4% of Uganda’s coffee production at the year of start and at peak even if we don’t increase coffee production at all, it will consume only 5% of the coffee at full capacity. There is nothing like a monopoly in this case. We don’t sign laws that create monopolies .People need to start reading agreements and not signatures, he said.

On the issue of export  for coffee, the Permanent Secretary said this will be determined by the prevailing forces of demand and supply.

“It will pay for superior coffee beans at premium price. This will be determined transparently and shall not be lower than that approved by Uganda Coffee Development Authority. At no point in time it will be allowed to buy at price below UCDA approval. This will allow competition to benefit producers.There is nothing like monopoly, giving Ugandan coffee to a foreigner and locking out Ugandans.”

Incentives

The deal which ends in 2032 , subject to renewal,  among others gave the Italian company, Uganda Vinci Coffee Company Limited , exclusive rights to buy all of Uganda’s coffee  whereas it was also exempted from paying taxes including income tax, pay as you earn, Excise Duty, Stamp Duty, VAT, Import Duty and corporate income tax.

On the other side, the Ugandan government undertook to inject money into the company.

This has since become a point of concern for many.

However, Ggoobi defended the same, saying there is nothing wrong with giving tax incentives just like it is done with other investors, both local and foreign.

“Government has provided incentives to the company to encourage it to add value to coffee and are(incentives) provided for in the law and can be accessed by any investor whether person or business. They are being enjoy by all categories of investors domestic and foreign,” he said.

Obligations

The Ministry of Finance Permanent Secretary  said as part of its obligations, the Italian company will invest in marketing the country’s finished coffee .

“The company will be responsible for financing the project and marketing its finished coffee products to the 40 billion dollar export market in Europe and Middle East which had not been penetrated. There is going to be provision of market to value added coffee and will benefit Ugandan coffee farmer.”

Ggoobi however warned Ugandans over peddling “lies” about the deal that he said will greatly benefit the country.

“I have heard a lot of talk from people who are not informed. Transforming a country is not just talking and gossiping and cheap politics. It means serous business which involves moving people from mindset of getting satisfied with less to that of creating value, aspiring for more and better. The reason I joined government to ensure we can improve on results we get in terms of economy I joined here to get things done, see budget perform better and see economy move. There is no crisis whatsoever. Coffee is going to flourish if we get some of these projects underway.”

The Minister for Agriculture Frank Tumwebaze on Wednesday washed his hands and those of his ministry clean of the controversial deal.

“Be advised that neither myself nor the Ministry of Agriculture is party or privy to that agreement. It was signed on behalf of government by the Ministry of Finance,”Tumwebaze tweeted on Wednesday.