Sep 25, 2022

Mawazo Writing Africa

Writing about the main

EDITORIAL: Leaders should stop auctioning public resources

In a rare determination, Uganda’s parliament this week scrapped a controversial deal that had given a mysterious company sole rights to market the country’s coffee. The deal, struck in 2015, only became public a few months ago when the executive branch tried to revive it after failing to fulfill it.

In addition to free land, water, electricity and a marketing monopoly on premium coffee, the government-to-government deal had Uganda and Uganda Vinci Coffee Ltd also made generous concessions to the company, including a 10-year exemption from corporate income tax, VAT, exemption from contributions and withholding of employees’ social security contributions as their PAYG tax deductions. The company would also have first call-off for the entire coffee crop, would have the right to license all other exporters, price coffee throughout the domestic value chain and set up a soluble coffee factory.

Despite generous concessions and the government, which seven years later had already spent $2 million to fill in the site allotted to Vinci Coffee, the company failed to meet any of its commitments.

Like many before The Vinci deal represented the unbridled impunity of the Ugandan executive and the uncontrolled transfer of wealth from public to private interests. Ms. Enrica Pineti was presented as the public face of Vinci Coffee Uganda during the signing of a deed of reinstatement that unveiled the deal last February. It turned out that she signed an agreement as a witness, the real owners of which are unknown to the Ugandan public.

At a meeting with members of a sectoral parliamentary committee, President Yoweri Museveni somewhat disagreed with the sectoral committee’s recommendation nullify the agreement, arguing that doing so would deter investors.

At a session last Tuesday, the House of Representatives concluded that the deal was irreversible as it opposed Ugandan violates the law and is therefore illegal.

The coffee treaty fits a disturbing pattern. In 2019, in another shady deal Ms Pineti was involved in, the government signed $1.4 trillion ($383 million) in IOUs to build a high-end medical facility on the outskirts of Kampala. Although a significant portion of these banknotes have been redeemed, the progress of the project is less than 20 percent. In the textile and clothing sector, the government continues to pay the electricity bills for tax-exempt, profitable private companies.

Audit reports continue to uncover poorly structured infrastructure contracts where Uganda is a net loser or at risk of losing public property to foreign interests . The people who sign these dubious deals are intellectually well equipped, but they are rarely punished for what is casually dismissed as a “mistake”.

It is scandalous that academically astute individuals should be allowed to to direct the mortgages of the state in this age. The executive branch should be held accountable for these mistakes. And as the outcome of the Vinci coffee deal has shown, Parliament is very well placed to assert its independence for the public good.