Uganda’s 1st chocolate maker weighed down by taxes

Uganda’s 1st chocolate maker weighed down by taxes

Pink Foods Ltd, Uganda’s very first chocolate manufacturer is on the verge of losing its equipment valued at over Ushs500million for failure to pay taxes as well as demurrage charges that have accumulated over a period of five years.

Using other machinery at their Kyanja-based factory, Pink Foods Ltd, pioneered the production of chocolate in 2014.

The company’s executives whom this writer met at Speke Resort Munyonyo at an exhibition, espouse huge and impressive plans of boosting value addition to Uganda’s cocoa which would greatly boost Uganda’s foreign exchange earnings, create jobs and create numerous opportunities to hundreds of thousands of cocoa farmers.

Although the government has previously encouraged and sometimes financially supported investors who create jobs and add value to Uganda’s produce, the sort of thing that Pink Foods are doing, owners say this support has eluded them, and they are disappointed by the government’s failure to walk its talk on supporting local investors.

Dorah Birungi, a wife to one of the owners of the company said: “Our major problem is high taxes. We have machinery we have failed to clear [pay taxes for] since 2011,” she added:

“We’ve knocked on the doors of many government agencies including Uganda Investment Authority (UIA) and got no positive response.”

To compound the problem, Birungi says, the delay to clear the equipment is causing an accumulation of storage charges otherwise known as demurrage.

Otherwise, most visitors to their Stall in Munyonyo, who included the Minister of Science, Technology and Innovations Dr. Elioda Tumwesigye, expressed excitement at the sight of a well packaged chocolate bar that was labelled Uganda Chocolate.

Minister Tumwebaze, did not hide his excitement at the fact that Ugandans can now get the taste of their own locally grown, roasted and processed chocolate.

He said: “At weddings, I have been giving newly weds money to buy chocolate to enjoy on their honeymoon.

Now I am so happy that I can give them actual chocolate branded made in Uganda.”

This was during the First High Level Conference on Application of Science, Technology in Harnessing Agricultural Transformation which was held at Speke Resort Munyonyo from September 27-29.

Origins of Pink Foods

Pink Foods is owned by relatives of Ssembuule – the famous industrialists who steel and electronics empire collapsed a couple of years ago under the weight of bank debts.

The company’s largely untapped potential as one of the first chocolate makers in the region is huge. This is so not only because of the fact that Uganda produces and exports a considerable amount of raw cocoa beans, the company is sitting on nearly two square miles of a mature cocoa plantation in Buikwe district near the shores of lake Victoria.

The plantation was established by the late Yafesi Magulu, Ssembuule’s father who passed away more than 20 years ago.

Although years of neglect by the family left the sprawling plantation in the bush, Birungi notes that they’ve now embarked on rehabilitating the plantation, which if completed, will be a huge source of cocoa supply for the company.

She adds that as the crucial equipment remains in transit, they have not lost heart and are pursuing their dream of producing more chocolate to supply the growing market for one of the world’s most demanded source of flavour and beverage.

Birungi notes that they have mobilised more than 900 cocoa farmers across Buikwe to rehabilitate their plantations, most of which were established with the late Magulu’s urging, or plant new ones.

Pink Foods anticipate to rely on the private farmers to boost the supply of cocoa through an out-grower arrangement.

“We have mobilised farmers to join an association through which we support them by way of giving them free seedlings. We have also built a health centre, as a corporate social responsibility drive to ensure that farmers are healthy and productive,” said Birungi who added that the acquisition of a heavy duty fermentry – a machine that dries cocoa beans, will greatly ease processing and production of chocolate.

The Future

The anticipated rise in incomes of many Ugandans, on grounds of the country’s anticipated windfall from oil and agricultural transformation, the rising population gives creates even more reason to expect that the future for Pink Foods is bright.

Birungi says that their company is not only preoccupied with making chocolate bars, some of which is already being exported to Germany, they are exploring new markets locally for chocolate-dependent enterprises such as beverage companies that make products like milk-shakes, yoghurt, ice-cream, pastries, candy, and pharmaceuticals that produce things like cocoa butter.

Aside from the exciting prospect of improving Uganda’s balance of trade through increased foreign exchange earnings of higher value chocolate, as opposed to selling raw cocoa beans, Cocoa growing in Uganda is proving an attractive and lucrative enterprise.

Currently, a kilo of raw cocoa beans sells for Ushs8500. And unlike other cash crops, farmers can harvest the pods twice every month – throughout the year.

In 2015, the value of Cocoa exports reached a record Ushs244bn from 26,412 metric tonnes, according to figures released by Swisscontact, a non-governmental organisation. This puts Cocoa in forth position as the country’s leading foreign exchange earners behind coffee, fish and tea.

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