On Tuesday, the tone in the tent at the Uganda Media Centre was unenthusiastic—even icy—before Finance minister Matia Kasaija approached the lectern
On Tuesday, the tone in the tent at the Uganda Media Centre was unenthusiastic—even icy—before Finance minister Matia Kasaija approached the lectern with a gingerly pace.
In his grasp was an 11-page statement he hoped would answer questions around escalating commodity prices Ugandan consumers had—with a mystified air—been asking.
In his baritone marked accent that lends everything he states an avuncular air, Mr Kasaija said narratives that fixed a view of the government as a no-show were patently false.
“Government is not sleeping,” he continued, without pausing—“we are looking at all sorts of ways to make sure that we control the situation.”
Observers, who share a dark appraisal of the road ahead, however, believe things will tailspin into chaos if—as widely expected—Uganda’s top two forex earners take a nosedive.
The past couple of months have been a bit of a whirlwind, with Uganda opting not to join the extension of the International Coffee Agreement (ICO) 2007 at the start of February.
Two Thursdays ago, Uganda’s gold was sanctioned by the United States Treasury Department—albeit by way of a crackdown on Alain Goetz’s Entebbe-based African Gold Refinery Ltd (AGRL).
In recent times, gold and coffee’s statuses as principal exports of Uganda have come to be understood as inevitable.
Data from the Bank of Uganda (BoU) indicates that between December 2019 and November 2020, export receipts from the precious metal totalled $1.7b (Shs6.2 trillion). This accounted for 44 percent of Uganda’s cumulative earnings that stood at $3.8b (Shs13.7 trillion).
In fact, over a five-year stretch ending 2020, gold breezed past coffee to assume an esteemed position as Uganda’s largest export. For instance, in 2019, the precious metal dominated Uganda’s export receipts (57 percent). Coffee (12.7 percent) placed a distant second.
Such feats were easily pulled off in spite of missed targets.
Only last July, the Finance ministry revealed that Uganda lost close to $720m (Shs2.6 trillion) in missed gold exports over a four-month period.
After sanctioning AGRL, Brian E. Nelson, the US under secretary of the Treasury for terrorism and financial intelligence, said: “Goetz and his network have contributed to armed conflict by receiving DRC gold without questioning its origin.”
He added: “Treasury has been very clear: global gold markets, at every step of the supply chain must engage in responsible sourcing and conduct supply-chain due diligence.”
There is a shadowiness about the source of Uganda’s gold. By its own admission, the BoU estimated that—in 2019—only about 10 percent of Uganda’s gold exports were excavated in the country.
The Democratic Republic of Congo (DR Congo) and Venezuela are alleged to provide the shadowy smuggling networks that have propped up Uganda’s bustling illegal gold market.
Mr Goetz has repeatedly rejected the links, and continued to do so after the recent sanctions.
Uganda’s permanent representative to the United Nations Adonia Ayebare offered support by insisting that “AGR does due diligence on sourcing.”
Mr Ayebare further clarified that “AGR is adding value to gold that used to be exported raw, and fetched [a] low price.”
Interestingly, the Uganda Coffee Development Authority (UCDA) has proffered value addition as a silver bullet that will help address structural distortions in the global coffee industry reportedly accentuated by the ICO.
“The focus of the Uganda Coffee Development Authority is to be aligned to the agro-industrialisation agenda,” the managing director, Emmanuel Iyamulemye said in February, adding, “We have been famous for exporting green coffee beans. Our coffee is being used to blend other coffees and the time is now to support value addition.”
Andrew Rugasira, who at the turn of the second millennium tried to put high-quality roasted and packaged coffee on shelves in European supermarkets, was circumspect in a February 21 Op-Ed piece.
He revealed that “the value-added coffee market is defined by historical asymmetries in capital availability, logistics, information technology and purchasing power between consumer and producer countries.”
He added: “As I learnt, at great cost, just because you roast your coffees here doesn’t guarantee that you will be competitive in European consumer markets. Five companies control 50 percent of the global market for roasted coffees (Kraft, Sara Lee, Nestle, P&G and Tchibo); and four companies control 40 percent of the world coffee trade (Ecom, Neumann, Louis Dreyfus and Volcafe).”
So, at what cost will the UCDA come to rue the decision not to take a risk on—as Mr Rugasira succinctly put it—the “new leadership at ICO…translat[ing] into better representation of our interests”?
Above all, will there be an improvement on the seven million bags of coffee exported in 2021? What about the value addition targets? With Uganda’s gold sanctioned, there will be immense pressure for the UCDA to up its game.
For now, niceties from the government have not been in scant supply. At a cupping and tasting event tailored to make an impression on China mid this month, Henry Oryem Okello—the junior Foreign Affairs minister—indicated that things are prim and proper.
He said: “Government fully supports the decision taken by the Uganda Coffee Development Authority to withdraw from ICO. The Uganda Coffee Development Authority is in charge of the industry, they are the drivers of the [coffee agenda] and we fully support them.”
The UCDA recently revealed that “Uganda exported…448,957 60-kilogramme bags of coffee valued at $72.17 million (Shs259.5 billion) in February at an average price…[that is] 11 cents higher than…in January 2022.”
A case of steady progress, perhaps. Or, more accurately, Mr Kasaija’s gingerly pace.
www.monitor.co.ug