By John V Sserwaniko
In his 19th June 2017 letter, President Museveni (clearly running out of patience) furiously called on Trade Minister Amelia Kyambadde to use the National Sugar Policy (enacted in 2010) and constrain the activities of Mayuge Sugar and GM Sugar Works Ltd on grounds that they were distorting the stability of the sugar market.
Museveni (who had written many similar letters in years prior) specifically accused Mayuge Sugar, GM Sugar Works and Seven Star for indifference and noncompliance with the sugar policy that requires adequate investment in agricultural development by way of empowering out grower schemes to avoid destabilizing the raw material (sugar cane) supply networks for SCOUL and Kakira which he says had operated in the Ugandan sugar industry for close to 100 years.
Clearly angry at the curious failure of both the Trade Ministry and UIA to decisively enforce the policy, Museveni also accused the three firms of breaching the policy guidelines that prohibit establishing of new sugar factories within 50km radius from the already existing operators’ premises.
He also accused them of using incentives like offering unsustainably very high prices in order to antagonize out growers with Kakira and SCOUL/Lugazi which had been supporting them for decades. He showed his contempt for what he called artificial prices.
He said much as this could give sugar cane farmers temporary happiness, it wasn’t sustainable because it would disrupt the sugar industry which his NRM had proudly revived in 1986 when production levels had collapsed to zero tones per year.
He accused them also of trying to establish out grower schemes within the 25 km radius, something he said was being very unfair to the established players. Like he had done in earlier letters to the same Ministry, Museveni decreed that the Trade Ministry forcefully relocates the three factories to avoid constraining the already established players whose new challenges he noted had led to general decline in sugar production because of inability to have stable raw material supply.
He stressed the policy on zoning must be strictly applied to ensure the new players go and open operations in new areas while strictly ensuring they aren’t located within 50kms radius from the existing factories. He noted “Many of the factories easily comply with this policy. Its only Mayuge, GM and Seven Stars that do not comply with this new policy. The matter should have been addressed long ago. Even today, as the figures show, the small factories are still indeed small.” Museveni squarely blamed the decline in sugar production on Mayuge Sugar proprietors namely Patel Magan and Akash Dobaria.
He wondered why the Trade Ministry was patient with the duo whose combined production capacity was just 10,000metric tones a year without adequately addressing raw material-related concerns persistently raised by the old players (Kakira, Lugazi etc) whose combined production was way above 400,000 metric tons annually.
He finally indicted the three small players by decreeing as follows: “The small factories that are in the zones of the traditional factories should not expand their factories or build new ones in the zone of the old factories. Nobody should deviate from this policy.”
He stated that because of the disruptions the new factories had occasioned, the production capacity for the big players had declined from 400,000 metric tons annually to mere 282,000. He demanded this anomalous situation gets quickly addressed which never happened. He was flatly defied like on earlier occasions.

Consequently, the country has had to pay dearly (for Mayuge Sugar and GM Sugar Works to remain in operation) as total industry production has continued declining because (as Museveni predicted) of distortion in the raw material supply chain. As of 2017, the entire industry output was 365,452 tons against 438,040 of three years earlier.
Museveni also showed hostility for the three small players by showing their relatively very low tax contribution to URA when compared to the old big players. His letter showed Kakira paying Shs109.2bn and Lugazi Shs83.4bn in total contrast with Mayuge Sugar’s mere Shs2.9bn and GM Sugar Works’ Shs1.2bn. He also referred to the installed total production capacity with GM Sugar Works’ being at mere 1,250mts/annually and Mayuge Sugar’s at 6,000mts/annually. He compared this to Kakira’s 180,000mts/annually and Lugazi’s 100,000mts/annually.
Museveni’s June 2017 letter, clearly against Mayuge Sugar and GM, was preceded by many others including the one by Gen Kahinda Otafiire in February 2011 stressing the need to heed the national sugar policy.
In that letter, addressed to MDs for the different sugar firms, Otafiire thanked Alam Group for accepting advice and Trade Ministry guidance not to situate their new factory in the Jinja neighborhood in order to protect old players as per the policy. He talked tough in that letter yet eventually no whip was cracked against indifference with which GM and Mayuge sugar acted.
Museveni himself had previously written another letter of 9th August 2016 and addressed it to Amelia Kyambadde clearly indicating it was a follow up to an earlier one. He was simply told there was no enabling law under which action could be taken against GM Sugar Works and Mayuge Sugar. This is how he resolved and directed there must be a Sugar Act to streamline operations of the industry to ensure sustainability.
He went as far as defending himself against claims that the decisiveness with which he was denouncing GM and Mayuge Sugar would lead old bigger players to become monopolies. He explained the same criticism was made against him when he directed for some form of protection for MTN Uganda in the late 1990s but the thing paid off when MTN profited within such a short time and this led to many other players flooding the Ugandan telecom market.
He made it clear it wasn’t right for the Trade Ministry and UIA to license new sugar players in a manner that risks reversing or eroding the gains made in the sugar industry under the NRM regime which he said inherited a Uganda with zero sugar production-and everything had to be imported.
In the same letter, Museveni commended Metha/Lugazi and Madhvani Group/Kakira for the historical role they played in 1986 when they enthusiastically responded to his call on them to come and help him revamp the local sugar production industry which had gone to dogs under past regimes.
He says their enthusiasm is what eased government efforts to revamp Kinyara Sugar Works which was later privatized to Rai Group. He rebukes the Trade Minister and UIA in the same letter for their regulatory oversight that permitted the licensing of GM Sugar and Mayuge to operate in the same locality where the two traditional players had patiently invested a fortune in strengthening out grower schemes.
He makes it clear it’s risky for poor peasant households to be lured into sugar cane growing by GM and Mayuge (using slightly higher prices) because profitable sugar cane growing requires a minimum of 10 acres of land per house hold. He expressed fear that such can lead to food insecurity as households abandon food production for sugar cane growing from which they don’t make adequate income.
He accused the two small sugar producers of fermenting “confusion” which had to be stopped (he used the word must) using the new sugar law. He offered to help them acquire land in faraway places if that is the price GoU must pay to protect the well-established sugar producers for the good of the economy. He was categorical that if not tamed, the activities of GM and Mayuge sugar could potentially diminish Uganda’s competitiveness as a sugar producing country in the COMESA, SADC and EAC market.

Museveni also highlighted the different uses of sugar and praised Kakira for going as far as using molasses to get ethanol for power generation which he said was an obligation for all licensed sugar operators. “This is why we can’t kill all these gains by the Madhvanis by teaming up with new actors to undermine the more established ones. This apart from destroying the business reputation of Uganda, as a country of economic chaos where you invest at your own risk and you do not expect protection from the State,” Museveni stated in his 9th August 2016. He insisted that GM and Mayuge-orchestrated chaos had to be halted through strong regulation of the sector.
Yet this wasn’t all regarding efforts that were undertaken to restrain Mayuge and GM Sugar. When still Trade Minister, Eng Gagawala Wambuzi too wrote letters calling for compliance with the sugar policy and was largely ignored. Former PS Amb Julius Onen too directly wrote to GM Sugar Director Akash Dobaria halting any expansion in sugar production levels until adequate investment was made in out grower schemes and the company having its own sugar cane plantation just like Kakira which 40% produces its own cane and 60% relies on out growers. Onen too was ignored and the curious impunity continued.
Much earlier on, when Janet Mukwaya was still Minister of Trade, the Prime Minister Apollo Nsibambi (who was under growing pressure to act from the President) wrote many letters calling for action against small players who the President rightly feared would jeopardize stability in sugar industry.
One of the Nsibambi letters was dated 11th January and was signed by his Personal Secretary George Bashaija Sabiiti. In there, Janet Mukwaya was directed to close down the jiggery production plant which the same GM Sugar Works had improperly opened in the Jinja neighborhood.
Nsibambi was acting on orders of the President’s letter of 3rd November which had showed fury against the inadequately regulated activities of GM Sugar Works. Directly quoting from Museveni’s letter, Nsibambi accused GM of “unduly inconveniencing sugar processing industries in Uganda.”
In an earlier letter, the Prime Minister had accused the same firm of operating jaggeries without being properly licensed. He referred to the Enguli Manufacturing & Licensing Act that made such licensing mandatory and absence of it a criminal offence. The Prime Minister’s office had previously “received a complaint from Kakira Sugar Works and SCOUL to the effect that GM Sugar is diverting sugar cane from out growers to jaggery production.”
That the PM even commissioned “a technical team which established that GM Sugar Works Ltd was in fact running a jaggery mill [yet no evidence has been produced by GM Sugar Works Ltd to show that the said jaggery mill was licensed by your [Trade] Ministry to operate.” The conclusion in the letter was: “The purpose of this letter therefore is to communicate the Prime Minister’s directive to close down the illegal jaggery mill being operated by GM Sugar and report to the Prime Minister within 2 weeks from today.”
This decisiveness by Nsibambi left the Trade Ministry no option but to crack the whip on GM Sugar Works whose bosses entered into sugar production industry clearly causing fresh disruptions as the President ably elaborated in his numerous correspondences.
In one of his numerous letters to the Prime Minister, Museveni had gone as far as accusing jaggery (sukari guru) mills operators of participating in the stealing and illegal harvesting of cane from the plantations owned by the more established operators. This he said “was affecting steady supply of raw materials to the factories.” He added: “Some of them engage in brewing of potent gin for human consumption. I’m now directing you to have these jaggery mills identified and their illicit activities halted. The Finance Ministry should design mechanisms to implement this directive. Revert to me on this matter as soon as possible.” Museveni’s long time concern, which has come to pass to the detriment of the economy, was that GM and Mayuge Sugar’s inadequately regulated activities would result into losses forcing the rest of the industry to operate at under capacity and lay off some workers for lack of access to raw materials to operate at full capacity.

These are some of the anomalies he sought to cure through the now very controversial Sugar Bill which Parliament bungled up by not ensuring there is zoning in a manner he originally prescribed. Besides zoning and protecting already operating actors, the Bill also sought to establish an industry regulator, set guidelines for licensing new players, establish a research institute and also provide guidelines on sugar cane pricing. Museveni hoped the new law would end arbitrary licensing of new sugar millers and other industry players-and ultimately stop the poaching of sugar cane from established out grower schemes and sugar plantations. Having come under pressure from key industry players, Museveni on Tuesday called a crisis NRM caucus meeting and asked for the review of the Sugar Bill (which he had previously refused to sign), a request Deputy Speaker Jacob Oulanyah granted.
But there is also politics of the Bill whereby many legislators fear to vote for zoning because their voters see it as something that deprives them of access to better prices, which the President despises as exciting but very unsustainable in the long term. So many legislators are treading carefully fearing reprisals from voters. This has been the case mostly for Busoga sub region whose capacity to increase sugar cane production is clearly constrained because of limited availability of the inelastic land as a factor of production. (For comments, call, text or whatsapp us on 0703164755 or email us at mulengera2040@gmail.com).