The Coffee Crisis: Dr. Ezra Suruma on the Risks of Dissolving UCDA

 

Coffee from Uganda

The ongoing debate over Uganda’s coffee industry has sparked intense controversy, culminating in a heated exchange in parliament and the recent passage of a contentious coffee bill awaiting the president’s signature. The bill has stirred public debate about whether the Uganda Coffee Development Authority (UCDA) should remain an autonomous agency or be absorbed into the Ministry of Agriculture. This has led to widespread concern, with many Ugandans, including prominent economist Dr. Ezra Suruma, voicing their opposition to the proposed changes.

Dr. Suruma, one of Uganda’s most respected economists, shared his perspective in a critical response to these developments, underscoring how the current structure of UCDA has historically supported the coffee industry without financial dependence on government funds. Established in 1990, UCDA was designed to operate autonomously, funded by a 1% service charge (or “cess”) on coffee exports rather than government allocations. Dr. Suruma explains that the increase of the cess to 2% eventually led to a significant rise in UCDA’s funds, which may have attracted the government’s attention, leading to the current proposal for its integration into the Ministry of Agriculture.

Dr. Suruma compares this to past experiences with privatization, particularly the push to dissolve or sell government-owned banks in the late 1980s. He argues that foreign-driven privatization policies often came with hidden motives, which he believes is now happening with the coffee sector. Suruma suggests that the push to consolidate UCDA under the ministry appears to be driven not by cost efficiency, as stated, but by government interest in controlling the revenue generated by Uganda’s booming coffee industry.

Drawing parallels between UCDA’s potential fate and the privatization of Ugandan banks, Dr. Suruma warns that dismantling a specialized institution like UCDA could compromise the quality and efficiency of coffee export processes. He notes that other major coffee-exporting countries, such as Costa Rica and Colombia, have maintained autonomous institutions for overseeing coffee exports, which he believes is crucial for quality control, research, and production expansion.

The implications for Uganda’s coffee industry, which supports millions of Ugandan households, could be profound if the UCDA is converted into a department within the Ministry of Agriculture. Dr. Suruma fears that this shift could lead to administrative delays and bureaucratic inefficiencies that would make it difficult for exporters to access necessary services promptly, a concern that other Ugandans have also echoed.

He advocates instead for a referendum to allow the Ugandan public to decide on UCDA’s fate, emphasizing that well-functioning institutions should not be hastily dissolved. Dr. Suruma’s letter serves as a stark reminder of the potential consequences of reshaping Uganda’s coffee industry and raises questions about the broader risks of prioritizing short-term gains over sustainable growth in vital sectors of the economy.