Government seeks supplementary budget to pay tobacco farmers

Kampala, Uganda | THE INDEPENDENT | The government has unveiled a plan to pay Uganda Shillings 11.3 billion to more than 1,000 tobacco farmers in Bunyoro sub-region who were denied payments by the tobacco companies that had reportedly contracted them.

Seven companies purchased tobacco leaf from the farmers whom say they had contracts that stipulate the terms that include the supplying, the agreed quality and quantity while the tobacco companies provide inputs and pay the farmers once supply is done.

The standoff between the tobacco growers has been on for more than six years and the problems with the companies became worse when government introduced more restrictions on the tobacco industry.

The biggest consumer, BAT Uganda closed its last factory in Uganda in 2013 and reduced its dealings with the farmers leaving other companies to take them on.

In 2014, the farmers from Bunyoro, West Nile and Southwestern Uganda petitioned the Speaker of Parliament to expedite the Tobacco Control Bill 2014, to give government more powers in the tobacco industry. By 2018, there were seven companies involved with the farmers including Meridian Tobacco Co Ltd, Alliance One Tobacco Uganda, Uganda Tobacco Services Ltd, Global Leaf Holdings and Tropical Leaf company.

Others are NIMATIBACK and Continental Tobacco which have failed to pay a total of Uganda Shilling 11,251,217,241 for leaf supplied between 2017 and 2019 by farmers in Bunyoro.

Continental Tobacco owed the farmers Uganda Shillings 11.8 billion and has since paid only Uganda Shillings 4.5 billion, leaving a balance of about 7.3 billion. NIMATIBACK owed a total of Uganda Shillings 5.2 billion and has since cleared 1.2 billion, leaving a balance of about Uganda Shillings 4 billion.

The two have also not had their licenses renewed for the 2019 and 2020 tobacco seasons according to the Minister of Finance, Planning and Economic Development Matia Kasaija.

Kasaija says they have since verified the claims together with the ministry of trade, which were further verified by the Internal Auditor General.

He urged the farmers to stop politicizing the matter. The ministry and the president agreed that the compensation be made in two installments with half made this financial year and the second in the next financial year.

The ministry will now wait for parliament to reconvene and the minister requests for a supplementary budget since it was not budgeted for.

The government has also resolved that the tobacco companies must pay the money to the government or they will be sued in the courts of law.

Kasaija assures that the money for the first installment can be got as soon as parliament approves.

Meanwhile, new measures have been put in place to regulate the activities of tobacco companies including their relationship with the tobacco growers. So far, only four companies have fulfilled the conditions and have been granted licenses. They include; Alliance One, Uganda Tobacco Services, Global Leaf and Meridian.

Recently, the government issued a directive against issuing any tobacco company with an export license if they have pending payments for the farmers.

The Minister of Trade, Industry and Cooperatives, Amelia Kyambadde says companies will also have to prove their commitment to how much they are ready to spend per season, in form of a performance bond.

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