UIA secures duty remission on rice imports

By David Muwanga

KAMPALA, UGANDA: The Uganda Investment Authority (UIA) together with the trade ministry have secured extension of the duty remission on imported husked brown rice till June next year.

In May last year, President Museveni issued a directive that there will be no further importation of white rice. He added that farmers must stop using wetlands to grow rice, urging that they should use either irrigation or grow upland rice.

He however allowed investors to import rice for a period of two years while increasing their capacity of farm production by establishing nuclear farms while supporting local farmers on out-grower schemes.

The Directive stated that selected rice millers can now import brown husked rice at $150 per metric ton down from $345 per metric ton but the rate will go back to $345 when the granted permission expires in June 2020.

It is expected that by that time, rice millers in Uganda would have established nucleus farms and grown support to out-grower schemes to fill the country’s deficit of 200,000 metric tons of rice.

“Government plans to stop imports of white rice by June 2020 as it expects that the granting of the duty remission, establishment of nucleus farms and support to out-growers would result into meeting the country’s demand for rice,” said Prosie Kikabi, the Uganda Investment Authority (UIA) acting deputy director of business development

Recently, however, rice farmers, millers and exporters petitioned the Speaker of Parliament Rebecca Kadaga to stop the eviction of rice farmers from wetlands in favour of foreign investors.

Mr Isaac Kashaija, the chairperson of the Rice Business Sector Association, said the rice farmers were stopped from growing rice in wetlands, a situation that has left many jobless.

“If we are growing rice in wetlands and government thinks we are not doing it the right way, then we need to be guided on the best modern farming practices of growing rice in because rice as a food crop best grows in wetland areas.

President Museveni however in a letter he wrote to the Finance Minister Matia Kasaija dated 7th May 2018, advised that farmers must stop using wetlands to grow rice, they should use either irrigation or grow upland rice.

Ms Kikabi explained that many rice millers were found to be operating below capacity and that when they met the President, they requested for an incentive that enables them to utilise idle installed machinery,” she noted.

She explained that government therefore requested the East African Community (EAC) partner states for a remit duty on husked brown rice to be reduced from $345 per metric ton to $150 for selected rice millers for a period of two years from June 2018 but renewable annually.

“The amendment seeks to enable rice importers establish nucleus farms and to support out-grower schemes,” she said.

UIA Investment Executive-Business Development Kara Komuhangi pointed out that the role of the Uganda Investment Authority (UIA) is to monitor the investors on quality to ensure establishment of nucleus farms and improve relationships with farmers while the Ministry of Trade, Industry and Co-operatives allocates import quotas,”

She explained that the EAC authorization’s that are revised every financial year had expired in June 2019.

“After the expiry of the first year of duty remission, the taxes were reinstated to $345 per metric ton with immediate effect and this had complicated the process of importing rice hence the review by the EAC,”

She added that in July this year, millers have been facing demurrage charges as a result of impounded rice containers that had not cleared the $345 per metric ton of duty.

“The meeting of the 36th extra ordinary sectoral council on trade, industry, finance and investment held in Arusha, Tanzania recently considered Uganda’s proposal and granted a duty remission at a specific rate of $150 per metric ton up to 30th June 2020,” she said adding that however government will not stop importation of rice but the tax will go back to the $345 per metric ton by July 1, 2020.

The meeting was also attended by officials from ministry of finance and Uganda Revenue Authority.

Uganda is estimated to have a deficit of 200,000 metric tons of rice. 000000