Remarks: Mr. Henry Ngabirano, Managing Director, Uganda Coffee Development Authority (UCDA)
Mr Henry Ngabirano conveyed his greetings from Uganda, a coffee population of about 1.2 million households which supported nine million people that grew coffee at a high attitude of 23000 mm above sea level. He was happy to note that coffee started in Uganda and went all over the world. He stated that if coffee was considered an African thing, then Robusta was Uganda, Arabica Ethiopian. He mentioned how coffee was underplayed when it transformed economies of the 1st world.
Uganda being the birth place for coffee, it played an important role in Uganda traditional, say in marriages, enthronement of kings and more importantly establishing relationship and keeping people sober and wake. Some of the cultures associated to coffee had died out due to modernisation but the chewing of coffee was a strong surviving culture.
Mr Ngabirano proudly said that Uganda was not only the birth place for coffee but also the number one exporter of coffee in Africa, second biggest producer in Africa after Ethiopia and forth in the world in terms of Robusta.
Uganda had come up with a national strategy to make its position in the coffee global economy after realizing that the best value in value chain was brand. Therefore, we moved from commodity beans to branded products where value was. Uganda has been trying to link up farmers with a concept ‘farm 2 cup’ with a social story to other markets in Asia beyond UK and Europe that were showing economic growth to Occupy the right space in the coffee economy.
He said that “Uganda is planning to increase Production and productivity, Quality and value addition, Market development and intelligence, Consumption and Institutional development”.
The new coffee drive was motivated by the fact that in the next five years the market would require 50-60m bags and Uganda was best placed to be a big player. The Big boys like Brazil and Vietnam had maximum production levels and exhausted growth avenues. This was a great indication for investment opportunities.
One of the challenges was the equal distribution of revenues generated by coffee. He cited that USA imported coffee worth $5billion and by the time it went to somebody’s cup, it had grown to $65 billion. Uganda needed to tap into this value. And by the time it went to tax collectors, it would be grown to over $200 billion. He appealed to Ugandans in the Diaspora and investors to help achieve the mismatch of revenue distribution.
Other challenges include Inadequate finance, low productivity of people and coffee trees, pests and diseases, price volatility, weak institutions and climate change.
Uganda was a unique country in the region with 2 main seasons characterized by rains throughout the year in some parts of the central and 2 fly crops throughout the year. This guaranteed continuous supply of raw materials (raw coffee) to the processing plants without having the operations interrupted.
Uganda Coffee Development Authority (UCDA) which was responsible for development and regulation of the coffee sub-sector played an important role in providing some of the inputs like seedlings and fertilizers to farmers free of charge.
Uganda coffee sector was fully liberalized with a strong government commitment to its growth and thus offered many opportunities in the coffee sector – meaning that anyone could invest at any stage along the value chain.
Uganda coffee producers enjoyed premium prices due to the high quality of Uganda coffee and export prices had continued to increase.
Opportunities in the sector
ROASTING OF COFFEE IN UGANDA
Coffee had a clear value chain and this made it easy for those who invested in the sub sector to engage in it with near certainty right from production up to consumption. They could also choose to invest at any level along the chain. In whatever form, coffee had market and the investor was assured of returns at whatever level of the chain he chooses to stop.
Investors could engage in processing mills where the berries were being processed, sorted and graded after size, weight and form. There were two methods of primary processing i.e. wet processing and dry processing. About 45% of Ugandan Arabicas were wet processed and 55% were dry-processed and called DRUGAR (Dry Uganda Arabica) from Kasese.
However, green coffee was less bulky and lighter than parchment, making it viable to undertake milling in Uganda, the growing country.
There were few indigenous roasting companies many of which roast coffee beans locally and the final products are sold locally. A few local roasters like Good African Coffee, Star Café Limited and Zigoti Coffee do access the international market like the US, UK, Japan and the Scandinavian countries.
The local roasting companies are focused on the local market and rarely export. Therefore, there was great potential to exploit by roasting coffee in Uganda and export it to international as well as local markets.
SETTING UP COFFEE CAFES/SHOPS /FRANCHISE IN UGANDA
There was a huge untapped market of setting up a string of coffee shops in Uganda. The branding attracted inquiries but had not yet taken off. Consumption of coffee would have to be increased from the current 6% to 15%.
Specific sector related incentives
There was a fully liberalized coffee sub-sector which guaranteed any player to engage freely in any coffee related activity.
Investors interested in coffee value addition could easily be availed land in any of Uganda’s fully serviced industrial park. This could be leased from an initial period of three years up to a maximum of 99 years from Government of Uganda through the Uganda Investment Authority.
The UCDA had five regional offices aimed at taking services like information, extension services, technical support and others closer to the players. The agency for example provided free coffee seedlings that were drought and disease resistant to farmers to enhance production.
The National Coffee Policy that was passed in 2013 puts in place clear-cut interventions required for scaling up performance and development of the coffee sub-sector. The Policy addressed critical areas aimed at increased production and productivity, improving coffee research, extension services, supporting and strengthening farmer organizations, promotion of value addition and development of the domestic coffee market. This led to introduction of new coffee farming opportunities and varieties that were more disease resistant hence increasing production.
The other opportunity has been the fact that there was enough political will for coffee development in Uganda. In most of the development frameworks that the country has had like Prosperity For All (PFA), Plan for Modernization of Agriculture (PMA), coffee has been on the forefront of the country’s development strategy. This could be exploited to ensure increased investment in the sector.