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Hundreds lose jobs as Mayuge sugar factory is closed

The closure of the factory still follows the alleged failure by its directors to establish a nucleus sugar estate of at least 500 hectares.

NAMAYINGO, June 26, 2024 – Over 600 people in Namayingo district have lost their jobs following government’s rushed closure of CN Sugar factory that was still undergoing construction.

The closure of the factory still follows the alleged failure by its directors to establish a nucleus sugar estate of at least 500 hectares before installing milling machines.

“Reference is made to your application to establish a sugar mill in Namayingo dated September 30, 2022, and no objection letter was issued to you on November 9, 2022, with a condition that you establish a nucleus estate of about 500 hectares, but during the verification exercise it was discovered that only 121 hectares were established,’’ the Minister of Trade, Industry and Cooperatives [MTIC], Francis Mwebesa partly notes in a letter dated June 17, 2024.

The letter addressed to the director of CN Sugar Limited says, “The initially issued certificate of no objection to setting up a factory in Namayingo is hereby revoked. I advise you to identify an alternative land in the area outside the Busoga sub-region where you can acquire substantial land to establish a nuclear estate and submit it to the minister, and any inconveniences caused are highly regretted.”

On his part, The Manager of CN Sugar Limited, Rashid Kakungulu, said they have enough acres of sugarcane as advised by MTIC.

“We have bought 1,300 acres outside the site. At the site we have 300 acres of sugarcane, and in the field, we have planted sugarcane on over 650 acres,’’ he said.

Kakungulu said they have so far invested US$12 million in the project and paid taxes worth Shs 1 billion on the importation of raw materials. “We have not yet erected the machines, but the construction of the factory is at 40 percent complete. Unless government compensates the investors with $15 million, we vow not to leave the area,’’ he said.

He added that “The Minister gave us a licence authorising us to construct stores, staff quarters, perimeter walls, and canteen. The outgrowers have spent a lot of money planting sugarcane. We are surprised that the same minister has revoked the licence.”

The Namayingo District Chairperson, Ronald Sanya, said people, especially the youth who were being employed by the company at the construction site are now jobless. “Closing the factory /construction site is a double tragedy,” he said.

Sanya said they would petition President Museveni to intervene in the matter, saying that the sugar factory being constructed is the only one in Namayingo district.

The Namayingo District Vice Chairperson, Abdallah Twaha Kawuta, said they were expecting that revenue from the factory would boost service delivery in the area but now it is closed by government.

“We have been depending on boat parking, fishing permits, but these activities were suspended. We are only depending on trading licenses. We used to collect Shs700m, but we now collect Shs100m to Shs 200m. We expected our revenue to triple with the establishment of CN Sugar Limited that has been closed,’’ he said.

Factory under construction (Internet photo).

The General Secretary of the Busoga Sugarcane Outgrowers Association, David Christopher Mombwe, condemned government for closing the factory being built, saying that government should instead pay attention to the fluctuating prices of sugarcane by setting a minimum price to benefit the farmers.

The Chairman of the Uganda Sugar Manufacturers’ Association [USMA], Jim Kabeho, urged the minister to revoke all licenses issued after 2020, saying they were issued illegally.

USMA in July 2022, petitioned MTIC demanding the process of licensing more mills within the Busoga Sub-region be halted on account of causing unstable supply of cane in the area.

USMA claims new factories  should not be in close proximity of the existing sugar as it contravenes the National Sugar Policy which says, “Sugarcane growing areas shall be planned within a radius of 25 kilometres, new sugar mills shall not be licensed within 25 kilometres radius of an existing mill. 30 percent of the area within this radius shall be used for cane growing and the remainder of the land shall be reserved for food security and other activities.”

In November 2022, legislators sitting on the Parliamentary Committee on Trade, Industry, and Tourism blamed minister Mwebesa, for allegedly usurping the powers of the Uganda Investment Authority [UIA] to issue operation licences to new sugar mills in Busoga and Buganda subregions.

Busoga is home to six major sugarcane processing plants, namely; Kakira Sugar Works Limited ([Jinja], Mayuge Sugar Factory [Mayuge], Kamuli Sugar Ltd. [Kamuli], Kaliro Sugar Ltd. [Kaliro], Bugiri Sugar Ltd. [Bugiri], and GM Sugar Factory [Buikwe].

The sugar industry is one of the oldest industries in the country, with its history dating back to  early 1920. By the 1960’s, the sector’s annual production was about 140,000 tonnes of which 120,000 tonnes was for domestic consumption and 20,000 tonnes for export.

However production declined significantly during the 1970’s because of mismanagement and neglect of the estates. After 1986, the industry steadily picked up following rehabilitation and divestiture programmes undertaken jointly by the National Resistance Government [NRM] government and the private sector.

By 2021, national annual sugar output had increased to about 600,000 metric tonnes of brown sugar and 60,000 metric tonnes of industrial sugar.

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