Kenya sleeps, Uganda wakes up and smells the coffee

Wednesday June 14 2017

 

By CHARLES ONYANGO-OBBO

A few days ago, there was a story tucked away inside Kenya’s Standard newspaper.

It said coffee factories in western Kenya had closed, because farmers were no longer selling the beans to them. They were selling it to, wait for it, Uganda!

In Uganda, they were quoted saying, they were getting the equivalent of Ksh100 ($1) per kilo. At home, however, they were getting only Ksh10.

What made that story remarkable is that during the bad years of the 1970s when military dictator Field Marshal Idi Amin was in charge in Uganda, and the economy had collapsed, the most lucrative trade between Uganda and Kenya was smuggled coffee.

The Ugandan crop was all ending up in Kenya, because it fetched peanuts at home. “Magendo” coffee made many people in Kenya, and a handful of Ugandans, very rich.

This trade continued into the early 1980s when Milton Obote was in power for a second time, and for the first few years after President Yoweri Museveni came to power.

From 1988, Museveni, a former self-proclaimed socialist, unleashed the most far-reaching economic liberalisation and privatisation programme Africa had ever seen.

The state got out of everything, dismantled the commodity boards that have become a leech on Kenyan farmers, and even did away with co-operatives.

It was carnage, and to this day, there are still people who wish Museveni the worst fate that God can bring on his bald head, for the pain that resulted.

Falling parastatals

Uganda coffee hit the floor, and some of the most dishonest practices were visited on the sector. But as the pretenders and weak of heart crashed and burned, the industry reorganised itself on the most ruthless and disciplined free market principles.

Uganda is now Africa’s largest exporter of coffee, and the second largest producer of coffee beans after Ethiopia, which consumes a lot more of its product.

Uganda and Ethiopia’s lock on the African coffee market is so complete, the two countries between them now account for 60 per cent of the continent’s production.

The two, ironically, represent totally opposite approaches because, in Ethiopia, the government still puts its finger on the coffee scale.

Because of that, should there be upheaval in the state, expect Ethiopia’s coffee market to feel the heat. I predict that Uganda will survive longer, because the hardnosed businessmen and women running it have priced all manner of risk into their prices already.

Therefore, in another 10 years, don’t be surprised if African coffee is synonymous with Ugandan coffee.

Kenya can challenge, but to do so it has to overhaul its parastatal sector. Kenya has more parastatals than Uganda has government departments. And because elections in Kenya are close affairs, no president is about to reform the system because it offers an easy source of rewards for supporters.

Ugandans have been quite amused by the dust raised in Kenya over the price of unga, and the notion of government “flour.”
That is something you simply don’t see in Uganda. What you eat, and the price of your food is entirely your private business.

An older Ugandan asked me recently: “Kenya used to be the capitalist economy of East Africa, when the rest were fooling around with some of socialism. What happened?”

The short answer is that Kenya didn’t have nearly 20 years of war.

Charles Onyango-Obbo is publisher of data visualiser Africapaedia and Rogue Chiefs. [email protected]