The Vinci coffee deal and the bad taste Ugandans cited in it in 2022

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Around April, details emerged of a deal signed in February by government and Uganda Vinci Coffee Company Ltd (UVCC) to market Uganda’s coffee abroad.

The agreement signed by the Minister for Finance, Matia Kasaija on behalf of government and Enrica Pinetti on behalf of UVCC would later turn out to create debate for almost the entire year.

The deal which ends in 2032, subject to renewal, among others raised concern from members of the public who learnt that it 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 for a period of 10 years.

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

Members of the public were also stunned to hear that government had in the agreement undertaken to shoulder the taxes .

Article 4.1.3 of the agreement stated, “for avoidance of any doubt, the company shall be exempt from corporate income tax for a period of ten (10) years; b enjoy duty-free importation of all Plant and machinery, motor vehicles, construction materials and equipment, packaging materials and any other materials for use of this project under the Easy African Community Common External Tariff (EAC-CET)”.

Article 4.1.4 goes ahead to say that, “If there is any change in law or change in tax which substantially alters the economic benefits accruing, the company may within one year from commencement of the deed (February 10) write to government in order to maintain the economic benefits of UVCC.”

Ugandans were also stunned to hear that Enrica Pinetti who had signed on behalf of government was the same person who had undertaken to construct Lubowa specialized Hospital along Entebbe road which has since stalled.

Bad taste

Ugandans cited bad taste in the coffee deal after learning that it left out key players including ministries and agencies responsible for coffee in the country but the Ministry of Finance went ahead and signed it.

Many members of the public insisted that the agreement bore the hallmarks of corruption, considering the manner it was signed without the public, especially key stakeholders’ participation and involvement.

A report by the Parliamentary committee on trade indicated the coffee agreement had a bad taste for Ugandans and recommended its termination.

According to parliament, the agreement was unconstitutional, illegal, void and unenforceable at law since it violated various provisions of the laws of Uganda.

The committee said it was wrong for government not to consult stakeholders in the coffee value chain including farmers and Uganda Coffee Development Authority who have a big say and would be affected by the deal.

Legislators noted that the same Italian company had failed to start or complete the construction of the Specialised Lubowa hospital.

The committee said such a company should not be trusted with another deal of such magnitude and wondered how the government made such an error.

After over two hours of debate, Parliament voted to have the deal terminated with immediate effect for being in “bad taste”.

Best deal ever

However, despite all the “bad” words said about the agreement, the Ministry of Finance described the deal as the best ever.

“The agreement was signed following a protracted process of due diligence and feasibility studies. 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 ,”Ministry of Finance Permanent Secretary, Ramathan Ggoobi  said.

Ggoobi also dismissed as untrue, reports that the deal had created a monopoly for Vinci as the sole buyer of Ugandan coffee from farmers.

“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.

“The company 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.”

Ggoobi blasted Ugandans for peddling lies against “the best coffee deal ever” for Uganda.

“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.”

Mafia trying to influence parliament!

Following the resolution by parliament to terminate the deal, shadow finance minister, Muwanga Kivumbi claimed mafia was trying to influence parliament to change its earlier stance.

“Right now an attempt is being made to alter resolutions of parliament on the coffee agreement,”Kivumbi told journalists.

“I have written letter to the clerk requesting him to furnish us with the resolution he is to submit to government. We say once bitten twice shy. We have given a precedent where we have been short changed and we are learning of maneuvers to short change on coffee agreement. Nobody can do this and get away with it. We want the clerk to attest to this. The Hansard, is there and records are there. This impunity must be stopped.”

The real Penetti?

Amidst all the fuss created by the Vince coffee deal, President Museveni came out to own it.

Speaking during the 60th independence celebrations at Kololo, the president took the blame for the coffee deal, daring those aggrieved to sort everything with him.

“In other words, Museveni is committing a crime by trying to add value to the Ugandan Coffee.   I am the culprit, come punish me. In other words, am committing a crime trying to add value to our coffee,” Museveni said.

Earlier, the president had admitted that Pinetti has no experience in coffee business and that he is the one who asked her to help the country in that line of business.

“When I met madam Pinetti, she had no idea about coffee. I, however, could see she had a wide network of contacts and I asked her to look into coffee. After some time she came back with a positive report that it is doable. For her she was in hospitals,” Museveni said.

“Those attacking that project are supporters of perpetual bleeding of Africa. If they were not, they would have responded to our call to add value to coffee and seek government assistance. I am ready to sit down with all coffee people. If you want add value I will support you. Instead of attacking the saviour, if you are genuine, join the liberation effort.”

With all the fuss about the coffee agreement, two lawyers, Henry Byansi and Michael Aboneka ran to court asking it to declare unlawful the coffee agreement.

The two lawyers told court that the actions of the Minister of Finance to secretly handpick Uganda Vinci Coffee Company Limited at the detriment of other able Ugandan firms to singly manage the production, export and setting prices of coffee beans and related products were illegal and created a monopoly.

In December, High Court judge, Emmanuel Baguma dismissed the case after ruling that it was brought before his court.

“I, therefore, do not find any reason whatsoever to interfere with the matter which is being investigated by Parliament. It is my view that Parliament should be left to do its work,” justice Baguma ruled.

 

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