Uganda: The Vinci Coffee Controversy

Despite the outrage following parliament’s recent damning report on an agreement between the Government of Uganda and Vinci Coffee without consultation with local farmers, government was not obliged by law to consult with stakeholders.

In this project support-type agreement, signed in February 2022, Vinci Coffee undertook to set up a processing plant in Uganda to add value to the coffee industry by making soluble coffee capsules. Government, in turn, made various promises to Vinci Coffee, including tax exemptions and an assurance of supply of ample good quality coffee for the factory.

Among the loudest voices in opposition to the agreement were the voices of local coffee farmers, protesting that that they were not consulted and now found themselves facing Vinci Coffee as a near monopoly buyer of their coffee.

The Parliamentary Committee on Tourism, Trade, and Industry, when probing the agreement, heard the farmers cries loud and clear. The committee ruled that the government had violated the constitution by failing to consult the stakeholders in the coffee value chain, including farmers and the Uganda Coffee Development Authority, the statutory regulator of the coffee sector.

As such, the committee concluded that the agreement was unconstitutional, illegal, void, and unenforceable at law. The committee directed government to terminate the agreement and initiate fresh negotiations.

Parliament also demanded to review all such investor-related agreements by government.

Is there a general duty to consult under the law?

Parliament relied on Article 8A and National Objectives and Directive Principles of State Policy X of the Constitution in reaching its conclusions on the duty to consult.

Article 8A (National Interest) provides that Uganda is governed based on principles of national interest and common good enshrined in the national objectives and principles of state policy.

Principle X (Role of People in Development) obligates the state to take all necessary steps to involve the people in the formulation and implementation of development plans and programs that affect them.

Do these provisions create an obligation on government to consult stakeholders when entering into a commercial contract?

The duty to consult is explicit in several laws like the National Environment Act, where public participation in the environment impact assessment process is mandated. Under the Electricity Act, public comment on applications for licenses or any modifications to licenses is also expressly invited.

In Pastor Martin Sempa v Electricity Regulatory Authority, a protest at a consumer tariff hike on grounds of not being consulted was rejected by the court as not offending the right to fair treatment by an administrative tribunal.

In Centre for Public Interest Law v Attorney General, what was at issue were regulations made under the Electricity Act. The court founded the duty to consult on the Cabinet Handbook and the Public Service Standing Orders provisions on the process of making regulations. The court also recognized that a duty to consult may arise out of legitimate expectation based on a promise by an authority to consult affected persons or from the established practice of consultation.

The court also relied on National Objectives and Directive Principles of State Policy X to say that the minister, in that case, had a duty to involve the public by at least consulting specific interested groups.

In Dairy Traders Association v The Dairy Development Authority, again regulations were nullified over a failure to consult. The court was harsh on the general penal-oriented attitude of the agro-related development authorities towards farmers and how decision makers completely ignore the stakeholders in making decisions. The court did not however specify the basis of its finding on a duty to consult.

Must government consult when entering a commercial agreement?

The successful cases above dealt with the nullification of regulations made without consultation.

Article 8A and Objective X have their proper application in the development of policies and undertaking of government programs. There was indeed stakeholder consultation in the development of the National Coffee Policy, 2013. The resulting National Coffee Act, 2021 also received stakeholder consultation and was passed by parliament as representative of the people.

Both the policy and the legislation provide for attracting foreign investors like Vinci Coffee.

This is the proper application of Article 8A and Objective X, public consultation during the law and policy-making processes.

Articles 8A and National Objective X does not create an obligation for government to consult stakeholders in entering a commercial agreement. A commercial agreement is not a development plan or program. It would also be impractical for government, during negotiations of a commercial contract, to have to consult Ugandans whether through parliament or specific interest groups.

Government must be free to exercise its executive function in negotiation of commercial contracts guided by the relevant laws and policies. If the government falls short it, is for parliament in their oversight function to call government to order. This is the proper role of parliament as an arm of government.

Author

Phillip Karugaba