Parliament has unanimously called for the termination of the agreement between the Uganda Vinci Coffee Company Limited (UVCCL) and the government, which sought to grant the company a monopoly in the coffee sector.
The Trade, Tourism and Industry Committee report on the alleged unfair terms of the Memorandum of Understanding between the Government and the UVCCL further ordered the Government to report to Parliament within six months of the adoption of the report.
Introduced by the Chair of the Committee, the Hon. Mwine Mpaka, in plenary on May 18, 2022, the report found that the deal was illegal as it contravened the Constitution and other tax laws.
“Section 8(a) of the Constitution was violated by the agreement when the execution of the agreement was concluded without the contribution of the coffee growers who are the owners of the coffee beans which are granted to the UVCCL by agreement,” the report read. in part.
The committee further observed that the structural adjustments undertaken by the government between 1981 and 1990 led to the liberalization of the coffee sector in Uganda and yet the agreement introduces a monopoly in the coffee industry, which is contrary to the principle of liberalization.
“The committee observes that the agreement creates a monopoly in favor of the UVCCL for the purchase of premium coffee beans in Uganda by preventing the government from registering contracts or recognizing any arrangement for the export of beans of coffee,” said Mwine Mpaka.
The committee found that the UVCCL had not started construction of the US$440 million coffee factory when it was allocated 25 acres of land in the Namanvanve Industrial Park.
“The Committee was informed that while the Government had spent colossal sums to level, fence, fill the land allocated for UVCCL to the tune of Sh7 billion and relocate power lines close to the site of the installation proposed, the UVCCL had not commenced or undertaken any activity as foreseen in the agreement,” read Mwine Mpaka.
It was also recommended that the government consider extending appropriate incentives to the 47 already existing local enterprises that add value as well as accelerating the capitalization of the Uganda Development Corporation to invest in the soluble coffee plant.
“The 47 already existing local processors aim to add value, including roasted coffee beans, roast and ground coffee, as offered by Vinci Coffee Company. This is done without incentives similar to those offered in the UVCCL agreement,” the report read.
MPs recommended that officials who have engaged the government in such illegalities should be penalized as a deterrent to avoid similar occurrences.
According to the committee’s findings, the agreement signed on February 10, 2022 revealed that while the government was represented by Finance Minister Matia Kasaija and Treasury Secretary Ramathan Ggoobi, the agreement was not signed by the UVCCL.
“The representative of the UVCCL, Ms. Enrica Pinetti signed as a witness and no one signed on behalf of the UVCCL. The Committee notes that under the Article and Memorandum of Understanding of the UVCCL, only a director, secretary or person appointed by the board of directors has the right to authenticate a document relating to the company” , said Mwine Mpaka.
Mwine Mpaka said the agreement could be challenged as not binding on the UVCCL.
Mwine Mpaka also refuted allegations that the committee’s recommendations were influenced by President Yoweri Museveni.
“Some conclusions leaked to the media and the president invited the committee. We sought advice from the president who gave us the green light to meet the president,” said Mwine Mpaaka.
He said President Museveni agreed with most of the issues raised, but stressed that the biggest issue was adding value.
“He recommended that three months be given to respond to the revision of the agreement rather than the termination, which can have far-reaching implications,” added Mwine Mpaka.
Hon. Abed Bwanika (NUP, Kimaanya-Kabonera Division) who was the main petitioner against the deal argued that the government should have consulted coffee sector stakeholders before signing the deal.
“How can the government give an individual company to determine the price of coffee and export it against the will of Ugandans. Coffee is a heritage for the people of Uganda. It is a gift from God, a strategic product and at the center of the country even before independence,” Bwanika said.
Deputy for Budadiri West County, Hon. Nandala Mafabi pointed out that coffee is the main source of foreign exchange and that giving the monopoly to a foreign company means sending all foreign exchange profits to that country.
“Such agreements are very dangerous. If you received a license in 2014 and so far haven’t built a coffee factory, you don’t know what coffee is. Tomorrow we will deliver 600 packets of roasted coffee to confirm that if you empower the locals, they have the capacity,” said Nandala Mafabi.
The Leader of the Opposition, the Hon. Mathias Mpuuga recommended that a caveat be placed on the land that has been awarded to UVCCL to stop all activity on it, “since the nature of the agreement has not prevented the company from carry out any activity on the land, even after its termination”. .
“Any attempt by the company to try to litigate, these are other issues; we on our side must protect the Ugandans,” Mpuuga said.
He also applauded MPs for supporting the report in solidarity, saying that although it started in the shadow cabinet, the whole House had taken an interest in the case.
“We all need to legislate for prosperity. I am in favor of adopting the report with amendments. The committee found that the deal was potentially unsigned. Does this agreement exist in form and function? Has the law changed? We need the Attorney General to enlighten us on this,” Mpuuga said.
The Attorney General, the Hon. Kiryowa Kiwanuka said the government will review the recommendations and report back.
“The law has not changed. If the agreement is null and void, it is null and void. We will review the recommendations and be happy to report back to you,” Kiryowa Kiwanuka said.
On April 12, 2022, Hon. Abed Bwanika raised a matter of national importance regarding the agreement between the government and the UVCCL.
He feared that the agreement would eliminate the Ugandan population involved in coffee production and give a monopoly on the purchase and export of Ugandan coffee to the UVCCL.