SEATINI Proposes Ways of Unlocking Potential of Uganda’s Coffee Sector

Uganda is among the world’s largest coffee producers, ranked eighth globally and second only to Ethiopia among African producers. The coffee sector has represented between 12-15% of yearly exports for the past decade (second only to gold). Crucially, nearly all of Uganda’s coffee emanates from smallholder farms. A more efficient and productive coffee sector has the potential to create decent jobs that alleviate poverty.

SEATINI Uganda Executive Director, Ms Jane Nalunga joined other panelists during the #TalkBusinessOverCoffee discussion to reflect on unlocking the potential of Uganda’s Coffee sector dubbed the ‘‘Sleeping Giant’’. The panel discussion provided an opportunity for various experts to share their perspectives in the context of recent developments in Uganda’s coffee sector including the signing of the controversial agreement between Government and Uganda Vinci Coffee Company Limited (UVCCL). The #TalkBusinessOverCoffee discussion was held on 27th May 2022 by Konrad Adenauer Stiftung Uganda & Sudan in partnership with its cooperation partner the Center for Development Alternatives (CDA). The #TalkBusinessOverCoffee discussion brought together various experts, coffee enthusiasts and professionals and stakeholders working on coffee related issues among others.

As part of this discussion, a presentation of the latest publication Economic Policy Paper Series #4 entitled; Uganda’s Coffee Sector: The Sleeping Giant? Can Financing Smallholder Farmers Unleash its Potential? was made by Mr Michael Mugisha, Director at CDA. This Paper aims to understand the systemic constraints faced by Uganda’s coffee industry in attracting finance to the sector. In search of this understanding, the paper seeks to answer three core questions: (i) what challenges and constraints do smallholder farmers face when attracting finance to the coffee sector? (ii) how have financing delivery mechanisms been utilized thus far, and what can we learn from cases of success or failure? (iii) what policy advice can contribute to lifting constraints that inhibit smallholder access to finance?
During her presentation, Ms Jane Nalunga noted that the agreement between Government and UVCCL brought to the fore the importance of Uganda’s coffee sector and the way government negotiates agreements.

She added, ‘‘Women are marginalized in the coffee sector. Broadly, there is need to understand why people shy away from agriculture. One of the major challenges faced by famers is the uncertainty of the market. However, it is important that farmers are given a fair price in the market’’.

‘‘Derisking using public finances is very important for smallholder coffee farmers, but international trading is quite complex,’’ Mr Robert Byaruhanga from Uganda Coffee Federation said.

Dr Fred Muhumuza, a Senior Economist noted that the existing policies cannot allow us to get what we want from Foreign Direct Investment (FDI).
He added, ‘‘Foreign investors should be very concerned about equity and ensure that all the capital injected builds local capabilities.’’
‘‘Cooperatives are important organizations in enabling economies of lending and socializing however, internal governance needs to play a big role in providing guard rails to ensure that the organizations grows,’’ Mr Michael Mugisha, Director at CDA said.

SEATINI Uganda is committed to advocating for public policies and private sector practices that strengthen small and medium scale farmers in the coffee value chain, like better prices, better access to finance, public investment in processing and value addition.