On 10th February 2022, the Government of Uganda signed an agreement with the Uganda Vinci Coffee Company (UVCC) whose specifics met the public eye through different media platforms. Upon knowledge of the unbelievably crooked deal, the public went up in arms condemning the unholy agreement designed to kill Uganda’s long-cherished coffee product. The ten-year-long agreement gives the UVCC exclusive rights over Ugandan produced coffee, exempts the company from paying any form of tax, and assures the company of a steady supply of water and electricity. In addition, if UVCC fails to realise its intended coffee target, the government will have to compensate it for the shortfall for any year. The irritation towards this coffee deal has even attracted criticism within the government, However, the Attorney general who sanctioned it insists it is not against any law.

While it is true that the agreement does not contravene any law in the land, sanctioning such an unfair and economically perilous agreement on behalf of the country is alarming, to say the least. Fast forward, the agreement creates a monopoly over Ugandan coffee because Ugandan farmers can only sell their coffee to the UVCC first before considering other buyers. The reality of having a monopoly is that the company will dictate the price to favour its profit maximisation. Further, the absence of any form of competition as has been seen in monopolies all over the world creates laxity, stifles innovation and stagnates the sector because the monopolist is making huge profits and there is no need to innovate or invest in quality assurance initiatives. Before the signing of this agreement, the National Coffee Act 2021 was enacted and key among its provisions was the requirement for all coffee growers to have a coffee-growing licence. It is therefore easy for the government to enforce its monopolistic agreement because all coffee farmers are known wherever they are.

"Block Quote"

One of the sinister facts of this deal is that Ms Enrica Pinetti, the UVCC Board Chairperson who signed the contract on its behalf, also owns Finasi construction company which was contracted to construct the National Specialised Hospital in Lubowa. For more than two years now, the company has not erected any wall despite constant assurances to start construction. The magnitude of faith that the government has in Ms Enrica Pinetti is equal to that the disciples had in Jesus after His resurrection!

In the logical world, it is unfathomable that a government can put a country’s flagship cash crop at the whims of an investor who has reneged on a contract to build a major hospital for more than two years. Indeed our leaders do not fear huge disappointments. Many of the people enraged by this destructive agreement may be tempted to think that this is a result of incompetence or the lack of simple economic knowledge explained above. Well, it is not! The people who execute such agreements are intelligent and far more sophisticated. They also understand the undesirable implication of their actions.

These unfair agreements are symptoms of a chronically perverted mode of service that treats Uganda as an enterprise of a few. The notion is that those who are strategically placed in government must pull strings to their benefit. The nation of Uganda itself was born as an entrepreneurial venture of the Imperial British East African Company (IBEACo) which was given royal chatter in 1888 to come and manage territories in East Africa. Uganda became a British protectorate in 1894, the IBEACo was to carry out general administration, collect taxes and enforce the order.

In their book Why Nations Fail, prominent economists Daron Acemoglu and James Robinson called such systems extractive systems. Extractive in the sense that the tax or wealth generated is to be extracted by well-placed people in the existing institutions. Under these systems leaders do what they know is detrimental to the interest of their people but benefits a few elites in the government. In Uganda, this system is not endorsed by the government as the accepted mode of operation but it is simply discouraged and not fought.

Some of the vices that undermine otherwise credible institutions to become extractive are corruption, collusion, influence peddling and intrigue. Powerful people with selfish interests use their influence to ensure that decisions that favour them financially are taken to the detriment of the country. These decisions manifest themselves in the form of unrealistic agreements signed on behalf of the country and policies designed to exploit the citizens without any legitimate purpose. Usually, these schemes present themselves as regulations only to be abandoned years or later when the damage is realised or upon the vehement protest of the people.

In 2004, the ministry of works and transport issued a statutory instrument that required all cars to have speed governors installed under the pretext of curbing road accidents. These devices cost three hundred thousand shillings at the time and every driver had to purchase them from three companies whose selection criterion was quite sinister. Operations to enforce the speed governor requirement hit the transport industry and those who procured the devices reported unrealistically low-speed limits and engine failure as a result of the devices. After a few months, the scheme was unceremoniously abandoned with no impact to show for it.

Another such scheme was the initiation of mandatory vehicle inspection that was done in July 2016 when the government contracted Societe Generale de Surveillance (SGS) to do the job. The proponents of this exercise cited the fact that many cars in Uganda are in very bad mechanical condition and needed to be inspected for their roadworthiness. The real problem was that Uganda was importing many used cars manufactured over twenty-five years ago and when such automobiles are driven on the dusty potholed Ugandan roads, their mechanical degeneration is dangerous. The rational decision was to stop the importation of old vehicles as was later done in June 2018. But because the team sponsoring the SGS deal back in 2016, it was not about solving the problem but simply profiting from the monopoly of mandatory nationwide vehicle inspection. Indeed after a few months of public protest, the idea proved to be difficult in its original form and vehicle inspection became voluntary.

This modus operandi is given fertile ground by the government’s tolerance of corruption which has resulted in malignant impunity in the hall of power. The president has on multiple occasions expressed his mild approach to corruption in a consistently stunning way. While attending the 25th anniversary of Transparency International Uganda, the President said that the laws and the institutions are there to fight corruption but he does not need a frightened civil service. On his 2021 inauguration, the President said that there is no bribery in government that he is not aware of. Perhaps his most alarming comment was on the opening of the new law year in February 2022 when he said that corruption is not so bad because corrupt people build hotels and create jobs. This soft speech on corruption is the reason why government officials are actively engaging in corruption. The assurance that there are no serious consequences to corruption or foul play is a critical booster for the appetite for public funds.

Given the humongous nature of the government, it is difficult to know how much damage has been caused to the country. The citizenry must use this coffee deal to reflect on the nature of public affairs and become more vigilant. History has proven that whenever the citizenry is vigilant, the government is restrained.