EDITORIAL: Leaders should stop auctioning public resources

The coffee contract between Uganda and Vinci fits into what has become a disturbing pattern. 

The East African
SATURDAY MAY 21 2022

Summary

Like many before it, the deal with Vinci represented the unrestrained impunity of the executive in Uganda, and the runaway transfer of wealth from the public to private interests.

Audit reports continue to unearth poorly structured infrastructure contracts in which Uganda is a net loser or exposed to the risk of losing public property to foreign interests.

The people who sign these dubious deals are intellectually well-equipped, yet they are rarely sanctioned for what are casually dismissed as “mistakes.”

In a rare show of resolve, the Ugandan parliament this week trashed a controversial deal which assigned a mystery company sole rights to market the country’s coffee. First entered into in 2015, the deal only became public a couple of months ago, as the executive tried to resuscitate it following non-performance.

In addition to free land, water, electricity and a monopoly on marketing premium grade coffee, the agreement between the government of Uganda and Uganda Vinci Coffee Ltd had also offered the company generous concessions, including a 10-year holiday on corporation tax, value added tax, immunity from contributing to and remitting employees social security contributions as well as their pay-as-you-earn tax deductions. The company would also have the first call on all the coffee crop, have the right to license any other exporters, set the prices for coffee across the domestic value chain and set up a soluble coffee plant.

Despite the generous concessions and the government having already spent $2 million on backfilling the site that had been allocated to Vinci Coffee, seven years later, the company has not delivered on any of its commitments.

Like many before it, the deal with Vinci represented the unrestrained impunity of the executive in Uganda, and the runaway transfer of wealth from the public to private interests. During the signing of a reinstatement deed that brought the deal to the fore last February, Ms Enrica Pineti was presented as the public face of Vinci Coffee Uganda. It turned out she signed as witness to an agreement whose real owners are not known to the Ugandan public.

In a meeting with members of a sectoral committee of parliament, President Yoweri Museveni somewhat opposed the sectoral committee’s recommendation to trash the agreement, reasoning that such action would scare away investors.

In a seating this past Tuesday, the House concluded that the deal was beyond redemption because it contravened Ugandan law and was therefore illegal.

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The coffee contract fits into what has become a disturbing pattern. In 2019, the government in another shady deal involving Ms Pineti, signed off promissory notes worth Ush1.4 trillion ($383 million), to build a high-end medical facility on the outskirts of Kampala. Despite cashing a significant portion of those notes, progress on the project is less than 20 percent. In the textiles and apparels sector, the government continues to pick up the utility bills for tax-exempt profit-earning private enterprises.

Audit reports continue to unearth poorly structured infrastructure contracts in which Uganda is a net loser or exposed to the risk of losing public property to foreign interests. The people who sign these dubious deals are intellectually well-equipped, yet they are rarely sanctioned for what are casually dismissed as “mistakes.”

It is scandalous that academically astute individuals should be allowed to preside over the mortgaging of the state in this age. The Executive should be held responsible for these lapses. And, as demonstrated by the outcome of the Vinci Coffee deal, parliament is very capable of asserting its independence for the benefit of the public.