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Cabinet Declares Tea Processing Factories as Export Processing Zones, Waives Licensing Fees and 18% VAT on Fuel
Dr. Chris Baryomunsi, the Minister for ICT and National Guidance, says a unit and department shall be created to handle concerns in the tea industry, addressing fears of contradiction with the move for the rationalization of agencies.
By Ivan Kaahwa
A committee appointed by the cabinet has examined the tea crisis in Uganda, which has resulted in a drop in the demand for tea, thereby affecting the sale of Uganda’s tea in other countries. While this decline is attributed to political disputes in South Sudan, Russia, and Ukraine, as well as economic crisis in Pakistan and Egypt, the Cabinet has directed the Ministry of Finance to develop a tea policy and regulatory framework to address issues of quality, provide support, and articulate industry concerns by May 2024. This policy shall consider the kind of seedlings given to farmers, including those recommended, approved, and tested, rather than allowing the planting of any seedlings of choice.
Dr. Chris Baryomunsi the Minister for ICT and National Guidance highlighted that the interventions by Cabinet seek to promote productivity and value, quality, licensing, and auctioning for tea, acknowledging farmers who have abandoned their gardens due to the cost of maintenance and drop in prices. As of now, a kilogram of tea in Kanungu District has dropped from 450,000 to 150,000 and 100,000/=, while some factories are no longer receiving the produce.
Cabinet has also agreed to establish a revolving fund to buy fertilizers, ensuring a 50% subsidy for 2 seasons until farmers can purchase their own. This initiative aims to boost quality and productivity by supporting farmers through processing factories. 20 Billion is required to buy fertilizers from Dong Song Factory, a local factory situated in Tororo.
Dr. Chris Baryomunsi, the Minister for ICT and National Guidance, says a unit and department shall be created to handle concerns in the tea industry, addressing fears of contradiction with the move for the rationalization of agencies.
On the other hand, the Cabinet has designated tea processing factories as export processing zones in accordance with the Free Zones Act. This entails waiving licensing fees, providing cheaper access to power, and other benefits regardless of the size of the factory. Additionally, the 18% VAT on fuel will also be waived.
The Ministry of Finance shall also support the tea industry to access affordable financing to clear outstanding liabilities, supported by the Agriculture Credit Facility, through Uganda Development Bank at an interest of 6% annually.
Furthermore, Uganda’s tea is auctioned in Mombasa, and the government plans to establish a tea auctioning market in Kampala. Preparations are underway to establish the effectiveness of this decision.
Farmers are in a crisis due to the drop in tea prices, with factories either not buying green leaf or offering minimal amounts. The government has intervened to support the tea industry, ensuring access to fertilizers, arranging for tea factories to access affordable financing to pay off debts that are suffocating them. Instead of auctioning tea in Mombasa, an auction market is to be established in Kampala, along with the formulation of a policy to address concerns in the sector.
@IvanKaahwa via Twitter #IvanKaahwaReports