‘Vinci, the Lubowa hospital investor has our best interests, we shall invest $80m as part of the coffee deal’ - Ggoobi

The Ministry of Finance Secretary  to treasury Mr Ramathan Ggoobi has today clarified on the controversial coffee contract Government signed with the Lubowa hospital investor saying government is indeed  sensitive and considerate of local investors  who have put their life-long savings into coffee and is willing listen and dialogue with them.

‘We should agree that Robert Kabushenga a coffee investors is part of a very small fraction of our coffee farmers who can look to export their own coffee. And even then, he can for now only talk about exporting unprocessed beans to buyers in Europe, the European buyers may pay Kabushenga a slightly better price than they offer our less advantaged farmers because his coffee is of better quality and he can bargain a bit more. But the bottom line is that we shall continue to export raw, low value coffee’ Ramathan explained

Uganda’s Secretary to treasury further added that Uganda should now focus on exporting coffee in its finest, finished form and capture a lot more value from it, he compares Uganda’s coffee trade to Ghana’s Cocoa trade , where farmers are earning less and middle men earning so much more.

The current global market value of coffee is $460 billion of Uganda can process her  coffee to fine, finished products, the country would  can get nine times more monetary value out of it i.e. $5.4bn a year.

Additionally this would get more Ugandans employed in the coffee chain.

‘The harder part is how to get to actually process our coffee beans into instant coffee to the standards that the most choosy consumers around the world will buy’ Mr Ggoobi added

While appearing on NTV Uganda’s On the spot show, MP Bwanika wondered why the Government did not organise enterprising local coffee investors  to do the processing or send out an international call for investors into the sector instead of engaging one Vinci, in response Mt Ggoobi said Vinci is the only investor who has come forward with a plan to do what the government wanted to be done.

And government has offered to invest $80m to process coffee here, and then sell it in virgin markets in Europe and elsewhere.

‘The cost and risk of penetrating those virgin markets are for Vinci to shoulder. All the Government has done is to provide Vinci with a measure of incentives that are available to every strategic investor – in coffee, dairy, iron and steel, name it’ Mr Ggoobi added

‘The incentives that have been availed to Vinci, just like it happens for other investors - local or foreign - are for the first 10 years. It is just to help it lay a foundation’ he further explains.

On why Vinci has been provided the listed incentives, Mr Ggoobi said it’s a common practice World over ‘.

‘After Vinci has penetrated the virgin markets and starts making profits, the incentives we are discussing will no longer be available to it, and it will pay all the taxes due to the Government. This is the plan for all investors who get incentives’ Ggoobi added

The Uganda Coffee Development Authority will retain the mandate of setting prices, and Vinci shall pay a premium price to ensure continued quality supply of coffee.

The Government, through Operation Wealth Creation invested heavily in promoting coffee production through among other things providing improved seedlings, and partners like the Buganda Kingdom government have helped a lot.

The stated aim is to push the current annual production of 420,000 tons up to 1.2m tons in the year 2030.

Government’s target is to produce more coffee get upto $2bn.

The stated aim is to push the current annual production of 420,000 tons up to 1.2m tons in the year 2030.

‘In guaranteeing supply of premium coffee to Uganda Vinci, the Government undertook to take “reasonable” steps. Such steps cannot include blocking an investor like Kabushenga from honouring his agreements’ Ggoobi explained

‘The win-win solution for everyone is for us to produce more coffee, and ensure that most of it (if not all) is premium, that is why I very much like the idea of continued dialogue on the issue. And while at it, we may get more value out of speaking with one another instead of shouting at one another’ he added