Is Uganda Making Fortunes From Tanzania’s Smuggled Coffee?

Published on 2nd April 2019

Tanzania is losing billions of shillings in foreign currency and domestic revenues from coffee smuggling despite the government efforts to curb the menace in Kagera region, a recent survey shows. Smuggling has caused poverty to small scale coffee growers in Kagera region and denied them  individual and regional sustainable development.

Kagera Region in the North West of Tanzania produces an average of 10,000 tonnes of coffee, mostly Robusta. It is reportedly losing one-third of its harvest to smuggling into Uganda, according to statistics from Tanzania Coffee Board (TCB). Uganda is number two coffee producer in Africa after Ethiopia.

According to data available at TCB, Uganda produces about 2.5 million bags of coffee annually, 1.5-2 million bags out of the total being Robusta. Robusta coffee beans have low acidity and high bitterness and are mainly used in instant coffee, espresso and as filler in ground coffee blends. Robusta coffee grows at lower altitudes in most of Kagera's green farms.

The coffee production in Kagera contributes to about 30% of the total coffee production in Tanzania. It’s the main robusta producing area in Tanzania. The only instant coffee factory of Tanzania, Tanganyika Instant Coffee Company, is located in Bukoba.

In Kagera, the major coffee growers are mainly from Karagwe and Kyerwa districts. These areas are involved in the buying and smuggling of coffee. The illegal businesses are conducted by businessmen in Lukulaijo village, Kagenyi, Omukalinzi, Nyabikulungo, Rwabwere and Omukigando villages.

"Business is still going on as usual. Some people here are still selling coffees to Ugandans. The bad thing is that those who sell coffee to Uganda are our civic leaders," says Patrick  Thadeus, a resident of Omukalinzi village in Kyerwa district.

Patrick observes that civic leaders normally buy coffee from local farmers at lower prices and sell them to Ugandan businessmen.

"Coffee is transported in bulk using taxis, bodaboda and trucks. The business is conducted at midnight through Mulongo border or unofficial routes," he says.

Adam Itoga, the Regional Manager of Tanzania Revenue Authority in Kagera says that there are many challenges that the Authority is dealing with, especially the smuggling of goods due to the porous border.

"We are however working hard to make sure that government revenues are collected effectively," he says.

He observes that in order to fight smugglers in the region, TRA in collaboration with other government instruments have formed a team called FAST (Fast Anti-Smuggling Team) to fight smuggling in the region.

"We have intercepted various products and taxed them. We have also arraigned smugglers in court," he says.

Kagera region is bordered with at least four countries. The porous areas include Lake Victoria waters.

"It's difficult for us to be everywhere because of the geographical area of Kagera region, so we are conducting serious awareness to local residents to give us information to easen our job," Itoga says.

Robusta coffee beans have a low acidity and high bitterness and are mainly used in instant coffee, espresso and as filler in ground coffee blends. It grows at lower altitude mostly in Kagera's green farms.

Tanzania is number four after Cote d’Ivoire, producing between 800,000–1.0 mil bags (about 50,000 tonnes) per annum, earning an average of $100 million annually. Between 350,000 and 400,000 bags of Robusta are produced in Kagera Region.

Another TRA official who prefers anonymity says that the Authority is losing revenue from various major taxes from registered coffee buyers.

“The impact of coffee smuggling to the authority is seen when our registered coffee buyers fail to pay their taxes. We lose taxes from VAT, import duty, Pay as You Earn and sometimes we fail to get forex,” he says, and adds that “Smuggling is not acceptable as it affects our domestic revenues.”

The Tanzania government through its strategic plan (2011-2021) hopes to support coffee production and expansion programs. This involves increasing productivity in existing farms and facilitating the private sector to develop new farms.

By Deogratias Kishombo

The author is a freelance journalist in Tanzania.

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