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Debts, lack of working capital, force BKCU to sell more land

MBARARA, January 26, 2024 – Banyankole Kweterana Cooperative Union [BKCU] is to sell its 44 acres of land located in Rwencwera 1 Village, Kashare Sub-county in Mbarara district to pay debts, as well as get working capital.

According to the bid notice seen by this reporter, BKCU expects to sign a land sale agreement with the successful buyer between February 5-9, 2024.

Margaret Birungi, the BCKU General Manager urged interested buyers to deliver bids to the union's head office located in Kakoba, Mbarara City by January 30, 2024.

According to Abbasa Ainamani Rubaromba who is the Chairman BKCU, the plan to sell the said land was supported its primary societies during pre-annual general meetings [AGMs] and was later approved by the delegates during BKCU’s 50th AGM held on June 30, 2023.

Rubaromba said the union leadership has been consulting officials in the Ministry of Trade, Industry and Cooperative [MTIC] to avoid any mistake while selling the said land.

Abbasa Ainamani Rubaromba, the Chairman Banyankole Kweterana Cooperative Union (Photo by Joshua Nahamya).

“The process of selling cannot be completed in one day,” he said, adding that, we had to first go for consultations with the Ministry of Trade, Industry and cooperatives so that we take the right procedures,” he said.

Rubaromba said they will inject some of the money from the land sale into the coffee business, having spent many years without being active in the trade.

He added that once BKCU starts the coffee business again, it will make some good money to start paying off the debts. “We shall be mobilising enough funds and do business and pay our creditors,” Rubaromba said.

He said the board has not yet fixed the reserve price explaining that the board will sit and determine how much to get from the land.

He also said that the union is still following up the government compensation that has not yet matured.

"Once we get capital we can start working but if we remain waiting for government compensation that we are not sure when it is coming and keep accumulating debts, there we are gone,” Rubaromba said.

However, Geoffrey Baingana, the former Chairman BKC said the money from the land to be sold won't be enough clear all the union's debts.

He said that, “Selling Mutonto land cannot help them because it will fetch very little money compared to the heavy debts the union has accumulated."

He instead advised the union's board to engage the government so that they get compensation for the war losses the union incurred during the political instabilities in the country in the 1970s, and early 1980s.

“What I would advise them [BKCU board] is to engage the government and be paid the claim so that they clear the debts rather than selling the little assets they have,” he said.

Julius Tugume, former General Manager, BKCU advised the current union leadership to apply for a grant in the United States African Development Foundation [USADF] to fund some activities.

“I wouldn’t support any cooperative to sell any of its assets; instead they should apply for grants to be supported because if you start selling the little assets, then you know the cooperative is gone," Tugume said.

However, this is not the first time BKCU is selling its assets to offset debts and resume coffee business.

The first to be sold was a 22-acre ranch in Kamarya cell, Akabare parish, Nyakasharara Sub-county in Kiruhura district, part of Mutonto land in Kashari sold to former MP Wilberforce Yaguma in 2010, a ranch [measuring one square mile] in Bunyaruguru was sold to Indian investors in 2013 at about Shs 500mln.

Other propertIES sold was Nyabikurungu coffee factory in Ibanda, land in Nyamitanga in Mbarara City which was sold to the Mbarara Catholic Archdiocese in 1980 and is presently occupied by Nyamitanga Technical Institute and Holy Innocent Children’s Hospital.

Apparently BKCU is indebted with over Shs 3.5 bln and some of the debts include Microfinance Support Centre MSC [Shs 1.4bln], UCCFS [Shs 240mln], Masaka Cooperative Union [Shs 190mln].

Other debts include Shs 4.6mln [security] [, fair trade premium funds [Shs 282mln], staff salaries [Shs 500 mln], among other debts.

BKCU was founded in 1958 to offer coffee advisory services, aggregation, processing, and marketing of members’ coffee in the western region. The number of primary cooperative societies subscribing to the union has dropped to 70 from 358.

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