Probe into Controversial Coffee Agreement Starts

The Parliamentary Committee on Trade, Tourism and Industry on Monday, April 25 2022 commenced investigations into the controversial coffee deal signed between Government and Uganda Vinci Coffee Company Limited (UVCC).

Chaired by Hon. Mwine Mpaka, the committee interrogated officials from UVCC led by the company secretary, Moses Matovu where they unearthed several irregularities regarding the coffee deal.

During the meeting, MPs on the committee were dismayed to learn how the Italian investor, Enrica Pinetti, the director, UVCC reportedly mortgaged 25 acres of government land in Namanve given to them to secure a loan from a commercial bank in order to set up the coffee processing plant.  

Jinja North County Member of Parliament, Hon. David Isabirye told the committee how UVCC reportedly wrote to Uganda Investment Authority (UIA) seeking permission to use the land titles for the said land to acquire a loan. According to Isabirye, the request was hastily granted by UIA in the wee hours of the night.
“This email was written on 01 September 2018 to the acting board chairperson of Uganda Investment Authority and it was replied at 2:36 am in the morning. The acting executive director of UIA acknowledged and gave a no objection at 7:59 am when offices were closed. I really want to applaud them for working trans-night,” Isabirye said.

However, the company secretary Matovu vehemently denied the allegations saying that UVCC has neither borrowed any money nor mortgaged the title of the said land in Namanve.
“UVCC has never borrowed any money or mortgaged the titles of the land in Namanve. I also heard that UIA is in the [committee] room; they are the leaser in respect to that land, if they have information that this land has been mortgaged, I would like to see that information. But as Company Secretary, I can confirm to you that we have never borrowed, we don’t have any loan,” Matovu who had already been put on oath said.

To his surprise, Bwamba County MP, Hon. Richard Muhumuza Gafabusa tabled before the committee an email in which Pinetti wrote to UIA Acting Director, Basil Aja seeking authorisation to use the land title to secure a loan.
“We were awarded a lease in favour of the land measuring 25 acres comprising of Kyangwe block 113 plot 738, Namanve, Mukono District. We took possession of the land and have started development of our site. We intend to mortgage the land to secure a credit facility to enable us establish and operate an integrated roasting, grinding and instant coffee processing plant in our industrial site mentioned above. I hereby seek your approval for the facility,” Muhumuza reads Pinetti’s letter.

Matovu later acknowledged the correspondences but insisted that the request to mortgage government land did not materialize, prompting the committee chairperson, Hon. Mwine Mpaka to demand for the copy of the land titles.
“Your director, Pinetti requested for a mortgage and when you look at the speed for acquiring the mortgage, it means it was of urgent importance. Now you cannot come to this committee and say you have never mortgaged; but the intention was to mortgage and when you look at these documents, you can see there was so much speed,” Mpaka said.

Kaberamaido County MP, Hon. Alfred Edakasi wondered why UVCC was mortgaging land yet they are not even paying premium to the Government of Uganda.
“UIA gave all this land to the company and waived off the premium which would amount to about US$2 million. Why would this company want to mortgage the land which they have not paid premium for? And why would UIA allow them to mortgage it when even the premium which would have been the basic gain for government has not been paid?” Edakasi questioned.

Matovu was later handed over to the police Criminal Investigation Department (CID) for further inquiries after presenting to the committee contradictory statements in regards to the said land. Mpaka demanded that the company secretary produces the said land title to prove that the land has not been mortgaged.  

UIA Executive Director, Robert Mukiza said that for a foreign investor to be allowed to mortgage the land title to acquire a loan, they are required to have constructed the factory to 60 per cent completion while the local investors are expected to fulfill the construction to 30 per cent.
On 10 February2022, the Minister of Finance, Hon. Matia Kasaija signed an agreement with Pinetti to allow her company establish a coffee processing plant worth US$80 million. According to the deal, the coffee company would retain exclusive rights to buy all Uganda’s coffee.

According to Kimanya-Kabonera Division MP, Hon. Abed Bwanika who raised the matter on the floor of Parliament on Tuesday, 12 April 2022, the agreement alienates Ugandans from the coffee business as it gives monopoly of purchase and export of coffee to only one organization.

Apparently, the agreement exempts the coffee company from paying all the taxes, including Income Tax, Pay As You Earn, Excise Duty and National Social Security Fund and also seeks to subsidize the company, giving them a special tariff in terms of electricity contrary to the Coffee Act.  

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