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EXPOSED: How Tugume, CICU members, tricked Museveni in shs37b coffee scandal

President Museveni in a group photo with Coffee Investment Consortium Uganda (CICU) officials at State House Entebbe in 2023

On March 23, 2023, President Museveni held a meeting at State House Entebbe with the National Resistance Movement (NRM) Parliamentary Regional Whips to promote the idea of supporting a consortium of several coffee exporters.

The meeting was also attended by a consortium of 15 companies dealing in the production and export of coffee.

The Coffee Investment Consortium Uganda (CICU) leader Nelson Tugume told the President during the meeting that “about 10 million US Dollars, approximately 37 billion Uganda shillings is needed in the first phase to export the required quality and quantity of processed coffee to the Balkan states and other markets that have opened as a result of quarrel between Russia and the West.”

On the government side, the meeting was attended by among others; the Prime Minister Rt. Hon. Robinah Nabbanja, the Government Chief Whip Hon. Hamson Obua and the Attorney General Hon. Kiryowa Kiwanuka.

Odrek Rwabwogo who heads the Presidential Advisory Committee on Exports and Industrial Development (PACEID) would later defend Tugume’s proposal to the President, saying Ugandan firms had limited market presence for years due to lack of capital.

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“5 of the 13 sectors now have orders of up to USD550m and we have created a revolving fund for firms to help underwrite invoices to help them supply these orders,” he observed.

Tugume speaking at a State House meeting in 2023

The export promotion strategy marketed before the President was that Uganda coffee exporters usually obtain orders worth millions of dollars from overseas but lack capital to fulfil these orders.

President Museveni advised that government should provide $10m to Uganda Development Bank (UDB) from which members of the coffee promotion consortium would obtain quick funds to ship coffee to foreign countries. 

However, members of the consortium reportedly persuaded Museveni to release the money directly to their consortium to avoid the bureaucracy of UDB.

Rwabwogo later explained that “The coffee fund to underwrite invoices is for 21 coffee firms,” adding, “And if you need to visit each of the 21 coffee firms under the coffee consortium, please do. Odrek doesn’t trade in coffee and my only interest is to help our country raise new revenue instead of unhinged consumption. The people who criticise our work and do nothing are often engaged in.”

Coffee Consortium members in a meeting with President Yoweri Museveni and NRM Regional Whips at the State House Entebbe on 20th March 2023

Abuse of public funds?

Interestingly, as soon as the coffee consortium received the funds, Nelson Tugume, the controversial and elusive businessman took a staggering Shs 21bn out of Shs 31bn received from the government for the promotion of coffee exports.

Several members of the consortium such as Jackie Arinda of Jada Coffee, Kwezi Kutesa of Kwezi Coffee and Gerald Katabazi of Volcano Coffee quit the consortium, with Arinda accusing Nelson Tugume of failing to account for the funds.

Arinda said the “consortium has lost direction and members don’t know what is going on” and that Tugume, “is not accountable at all and no longer holds meetings to update members on the progress of the consortium’s work.”

The consortium has since issued a statement, saying it received Shs 28bn through the Science, Technology and Innovation Secretariat at the Office of the President (STI-OP) on 28th September 2023.

“For emphasis, the grant was solely for a coffee value addition innovation project for CICU and its members only. The development of the largest coffee value addition facility in Uganda situated in Ntungamo with a full capacity output of close to 10,000MT of roast and instant coffees,” said the consortium’s official, Tony Miiro Kibuuka in a statement dated January 17, 2024.

President Yoweri Museveni meeting with the NRM Regional Whips at the State House Entebbe on 20th March 2023

“The tertiary hub received its block allocation in one go to set up a modern precision technology on soluble coffee plant (both freeze and spray dry), developing all-inclusive of roads, warehousing and equipment for fresh roasts, capsules, drip coffee, water treatment and fresh roast packaging lines. Whereas the secondary hubs received theirs in two tranches with the first tranche going to trade preparedness (Infrastructure and Utility development but exclusive of construction) and the second to green bean aggregation through the ECO hub system,” Kibuuka added.

The consortium does not explain why it diverted from its original purpose of requesting public funds from President Museveni – “exporting the required quality and quantity of processed coffee to the Balkan states and other markets that have opened as a result of a quarrel between Russia and the West.”

The unanswered question is: If Tugume wanted money from the government to develop his personal coffee factory in Ntungamo, why then did he take the consortium members to State House Entebbe? 

A source at the Finance Ministry disclosed that the “government has its known methods of supporting private enterprises. A due diligence process would have preceded a government grant or investment in Tugume’s coffee factory in Ntungamo. What we see now is a consortium pitching for funds to increase coffee exports and money being diverted to do other things. The Auditor General and other investigative arms of government should take interest in this matter.”

The funds taken by Tugume for his private enterprise is almost higher than the 2023/2024 financial year budget (Shs 22bn) which the government allocated to cater for the allowances of medical interns and senior house officers across Uganda. 

Figures and how the money was shared

On the 29th of September 2023, Shs 31,450,000,000 was disbursed on the account 01490011034070 INO Coffee Investment Consortium UG Ltd.

Of this amount, shs23,756,000,000 was transferred to Inspire Africa Establishments – 01373656184711 on the 30th of the same month and the balance was transferred on the 13th of October as follows

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  1. Rubaga Cooperative Society Ltd- 567,550,000
  2. Omukazi W’omutima Ltd- 567,550,00
  3. New Bukumbi Coffee Processors -129,500,000
  4. Fun zo Coffee – 1,247,000,000
  5. Masha Quality Holdings – 567,550,000

On 8th November, 2023, the following was shared

  1. Funzo coffee – 1,247,000,000
  2. Inspire Africa Establishments- 433,400,000
  3. Rubanga cooperative society- 567,550,000
  4. Out of Shs 23,756,000,000 for Inspire Africa Establishments Ltd, 19,600,000,000 was transferred to Inspire Africa in dfcu (Shs 9.6B)and Equity Bank (10B)
  5. From the Shs 9.6B in dfcu, the following payments were made;
  6. Jacqueline Nsabimana – Shs 40m
  7. Kajara People’s Sacco- Shs 1,02B
  8. Tugume Nelson- Shs 3.5B
  9. Francis Harimwomugasho- Shs 30m
  10. Xtraordinary Media- 250M
  11. Funzo coffee – 560M

Credit: ChimpReports

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