Good African Coffee Closure. Is Uganda’s economy on Auto Pilot?

Andrew Rugasira is no saint, however one thing I can authoritatively say about him is that he is a resilient entrepreneur who always turns ashes into beauty. Many years back, I recall him running a prominent promotions company called VR Promotions which bit the dust. He was humble enough to go into hibernation only to re-emerge a couple of years later with Good African Coffee.

When I bought the newspapers of the 25th of April 2017, I was taken back upon reading a story about how the tax man had closed down his business for tax arrears of UGX 1.2 Billion.

On the 23rd of April 2017, Ian Ortega posted a mind opening article on Facebook in which among others he stated, “… We pride in building mansions in our villages in a sea of mud and wattle houses. And in the end we pay for it with insecurity, with deaths. It makes no sense to have majority poor and few rich. It always backfires… Start doing something to make sure the economy works for everyone regardless of their field. Let it work for a musician, for an artist, for an engineer, for the teacher etc. That is how you build sustainable societies.

Having interacted one on one with Mr Rugasira a year back, I got to know quite abit about his ethos. While he is a hard nosed businessman, his passion for equitable growth and development is worth admiring.

Businesses close for various reasons and their closure has varying impacts on the economy. There are businesses whose closure will largely cause ripples among a few selected elites (who tend to be the noise makers) while others have the Fall Army Worm effect of distorting the bottom of the pyramid poor.

According to the New Vision, Good African Coffee has a network of more than 14,000 coffee farmers and has facilitated the set up of 17 (Seventeen savings and credit organisations) for these farming communities. The average household in Uganda has 5 members. This implies that if each coffee farmer is equivalent to one household, then the direct impact of his investment at this micro level has a reach of at least 70,000 people. Considering that in Uganda, it’s part of our culture for a household head to help various extended family members especially economically, we can safely assume that each farmer has an impact on 10 (ten) people in the extended family bracket. This implies that upto 140,000 people indirectly benefit from Good African as a result. On average we can safely state that at least 200,000 people from the coffee growing region are beneficiaries.

The New Vision further stated that the Good African products are available in over 700 UK Supermarkets as well as 500 stores in Africa. As a supermarket patron, I have come to learn that products on those shelves serve not only the purpose of consumer consumption but also national branding. How many people today in the UK swear by Good African Coffee? Judging by the inquisitive nature of today’s shopper, chances are high many have got to learn more about Uganda in the process. What better marketing for our nation?

While I am inclined to believe that management issues have definitely contributed to the status-quo, it’s quite sad that the tax man would be left to execute such a closure without proper appreciation of its wider implications. The Uganda Revenue Authority is not to blame since it is merely an execution agency tasked with collecting revenue for the Government. However, with all the tax breaks we keep hearing being directed to questionable foreign investors, why would a legitimately Ugandan owned and home grown business fail to be extended help? We just heard about the planned UGX 77 Billion tax relief that a number of companies whose list is led by the Sudanese owned AYA Group of Companies are likely to get. In my view, the footprint Good African Coffee has is much wider than AYA and any of those companies on the bail out list yet above all it impacts the lowly farmer whose sole hope for survival is farming.

We always hear of decisions being made in National Interest and this is what Hon. David Bahati, the State Minister of Finance for Planning emphasised while meeting Parliamentarians over the AYA bail out. Why was Good African overlooked?

  • Is it because the latter promotes the well being of peasants and there is this general fear among the political elite of genuinely empowering them?

  • Could it be that Rugasira doesn’t have the right brokers to argue out his case before the high and mighty in the Ministry of Finance?

We have been led to believe that overnight business moguls who set up with Shopping malls out of the blue are the ones that deserve respect and propping in order to keep our economy afloat but if we do not babysit the Rugasiras of Uganda and ensure that their businesses succeed at all costs, we shall continue in the cyclic rat race characterised by chronic poverty. Government should sit down Andrew Rugasira, make it clear to him that the success of his business is a national priority and could even have security implications considering that a large section of the farmers are from the already troubled Rwenzori region who might perceive matters differently. The riot act should be read out to him before working out bail out terms and conditions.

PS: In case you are comfortably employed with a regular salary and high flying MBA, you might have a problem appreciating the challenges genuine entrepreneurs go through in this Ugandan economy of ours. One day though, I hope you will be around long enough to appreciate what goes on the other side of the bridge.

I say, Bail Out the Brother !!!!!!

[UPDATE: Two days after publishing this aricle, Good African Coffee was reopened. I thank the authorities for having exercised a sense of sobriety. Now the ball is in Rugasira’s court to ensure he complies as required. ]

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter.

Email lunghabo [at] gmail [dot] com

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3 responses to “Good African Coffee Closure. Is Uganda’s economy on Auto Pilot?

  1. It is a sad day for the industry in general in light of the impact that the closure if a business does to the economy and all the beneficiaries of the going concern. However, one other aspect the writer needs to address objectively is ‘why do businesses fail?’ within the context of god African coffee.
    It may be the case of ‘the worm’ or it could be failure by the. company to manage its portfolio. I have absolutely no idea, what coyld have caused uts collapse, however, before looking for the bail out and pointing fingers, we could look internally at the decisions made by the board. We could learn a thing or two about lufestyles of young entrepreneurs and how businesses should be run and how to manage growth visavis creation of a sound asset base.

    • Agreed. The additional discussion points can form entire blog posts of their own. I’m sure more information will be unfolding as the days go by. We just might see another blog post here.

  2. Mr. Rugasira has done alot for the coffee industry in Uganda and abroad. The Ugandan coffee brand is his brain child even UCDA had a free ride on his efforts. There billionaire tax evaders who pay URA taxes paltry amounts, and keep moving around pausing with pregnant bellies and huge waistlines from Kabale, Kisoro and central Buganda on record to perennially evade taxes and patriots such as Rugasira are harassed by URA. Let URA publish a list of individual tax payers at least 200 citizens and we show them those hiding properties and other incomes tax free.

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