Museveni advised me to sell my assets and pay the debts
In the last part of our series from Gen. Salim Saleh’s
book, My Psycho-Economic Evolution, the general reveals
how his efforts to revive the coffee co-operative movements
and fight poverty hit a rock and in the process he blew
his personal fortune. His brother, President Museveni, refused
to bail him out of his debts.
Divinity Union Ltd. concentrated its efforts on studying
the coffee industry with a view of developing a viable strategy
that would improve the lives of peasant growers.
A study was commissioned and its findings presented in the
‘Coffee Strategy’ on the 6th of March 1999.
The strategy envisioned the set-up of:
• Joint venture with Co-operative Unions
• Joint venture with private companies
• Central Coffee Factory
• Agricultural Extension Services
• Coffee Rehabilitation Scheme
• Agricultural Mechanization
• Developing a Model Coffee Farm
Coffee being a major source of income for Uganda’s
economy grown by the rural population, it was envisaged
that partnership with the unions would enable DUL utilise
the societies’ network to reach the rural farmers
who constitute a substantial portion of the peasants, thereby
contributing to the improvement of their standards of living.
It was in this regard that we decided that Bukalabi Rehabilitation
Scheme be developed into a pilot project for the rehabilitation
of peasant owned coffee plantations.
The Prime Minister, Prof.
Apolo Nsibambi, receiving the value addition
concept paper and a pack of Mt. Elgon Coffee, August
|Shaking hands with Dr. Kassa
(right) after the formation of DUL,
November 1998. Looking on is Lawyer, William Byaruhanga
DUL was committed to integrating farmer friendly methods
in its operation to improve lives of the peasants. In line
with this principled position, we decided to contribute
to the rejuvenation of the co-operative movement.
A diagnostic study on the Uganda co-operative movement
was therefore commissioned. The study documents the weaknesses
that led to the collapse of the major unions and the dormancy
of the entire co-operative movement. It also provides measures
for the rejuvenation of the movement.
A subsequent study to establish whether DUL’ s partnership
with the unions was justified pointed out thus: “Vices
such as mismanagement and corruption are not unique to the
These vices have their roots in the norms and values of
the society at large. There is no way the co-operatives
could have been an island in a grossly mismanaged situation
the country has gone through its post- independence period”.
Therefore, what the unions required was the capital, effective
management and marketing skills.
I made effort to acquire knowledge to equip me with the
capacity to guide the co-operative movement and applied
to the University of Wisconcin, USA, on the 31st of August
1999, for a course on Management of Co-operatives.
In recognition of the commitment to the Rejuvenation of
the Co-operative Movement, Banyankore Kweterana Union, Mbarara
district, appointed me their representative on December
2, 1999 to negotiate and reschedule their debt with the
defunct Co-operative Bank and bfollow-up government’s
compensation for their war losses, among other assignments.
In an advocacy paper to His Excellency the President, ‘The
Co-operative Movement: A Contribution to Modernisation of
Agriculture’, I encouraged government to consider
revamping the co-operative movement as a complementary effort
to poverty eradication. I suggested that partnership with
the private sector would launch the co-operative approach
to modern marketing and management skills.
Indeed we tried to convince other stakeholders to consider
the option. I am pleased that today the Office of the Vice-President
coordinates the restructuring of the Co-operative Movement.
We operationalised the coffee strategy by forming joint
ventures with coffee co-operative unions in the country,
namely: Sebei Elgon Coffee Union (SECU), Kapchorwa district,
Okoro Coffee Growers’ Union, Nebbi district, and Banyankole
Coffee Union (BKCU), Mbarara district. These farmer groups
were entitled to 49% of the shares in the joint venture.
The basis of the shareholding was to save the farmers from
exploitation by middlemen and ensure they get value for
Contribution by respective parties to the joint venture
with Sebei Elgon Co-operative Union (SECU), for example,
were as follows:
DUL would pay off immediate demands by SECU’s creditor.
• The balance of SECU’s debt remaining would
be renegotiated by DUL with SECU’s creditors in order
to fit in with the joint venture’s cash flow.
• DUL would secure the finance required to commence
coffee processing and export.
• SECU was to contribute with usage of its processing
facilities by the joint venture.
Search for funds
The Coffee Strategy required Shs 54,000,000,000 to cover
the envisioned plan. There was therefore a need to outsource
the financial requirements. I secured funding from Standard
Chartered London. They promised to approve a loan to finance
the entire coffee project, or a considerable percentage.
I sold my shareholding in ENHAS, and In-flight Services
Ltd at a loss to facilitate the loan.
The Managing Director of Standard Chartered Bank, Kampala
Branch, nonetheless did not give a favourable opinion on
our loan request. They cited negative media propaganda stemming
from my attempt to engineer capital through acquisition
of Uganda Commercial Bank (UCB).
As a result, my agent at the London Branch lost his job
because of his empathy in helping an African entrepreneur.
Thereafter, we identified a commodity-trading house known
as Fenton Commodities Inc.
They promised $15 million for the implementation of the
coffee strategy. The Heads of Agreement were signed viz
the Denton hall agreement in 1999. We opened DUL International/Fenton
accounts and even transferred the required insurance fees.
The Fenton opportunity did not materialise yet we had relied
on Fenton so much that we ignored indigenous mobilisation
Dr. Kassa and I lost $200,000 and $600,000 respectively.
I received the shocking news that the Fenton financing [had]
stalled. I had spent generously on all the four areas of
interest mentioned in the Tarehe Sita statement from personal
coffers, most of which was acquired by way of loans. Since
I did not prioritise the implementation of the Tarehe Sita
but spent capital on all of them simultaneously, when the
hope of Fenton crashed, we were left in a financial quandary.
The following were the resultant implications;
• Funds committed to paying the debts of the unions
and establishment of the infrastructure became a big loss
• DUL could not meet its financial obligations
• Efforts to rejuvenate the co-operative movement
were adversely affected
• It was hurting not to conclusively execute my ‘will’
as contained in the Tarehe Sita statement which at this
point in time was public knowledge.
I constituted a team (Arif, Sarah and Flower) to ascertain
my assets and liabilities and give me a balance sheet. They
however, proposed that a professional firm be commissioned
to undertake a financial evaluation and audit of DUL.
The report by Impact Associates was a shock of my life!
I learnt that I was indebted to the tune of Shs 3 billion
arising from acquired loans for the execution of the Tarehe
As a revolutionary, I hate debts and tax evasion. It was
therefore embarrassing of myself being ‘raided’
by Special Revenue Protection Services (SRPS), its good
intentions not withstanding. The revelation of such levels
of indebtedness caused me a lot of panic and my staff went
Within the same time, there were personal setbacks that
compounded the problem and complicated my life. I had applied
to the University of Wisconcin in America to undertake practical
lessons in Co-operative Economics. I had hoped to be attached
to a tutor for guidance in the presentation of my thesis
on the basis of a three-year study on Co-operative Economics
under the auspices of DUL.
I never got a feedback. I was surprised that they were
not willing to offer further training to a person of my
experience in the subject.
In the year 2001, I met Mzee at Kangole - Karamoja where
he had gone to guide the disarmament process of the Karimojong
pastoralists. My request to him to help clear some of my
debts was turned down.
The explanation that I had committed the loans to co-operative
economics, a public good that would foster modernisation
of agriculture, didn’t make sense to him. He advised
that I sell my assets and pay the debts. Interestingly,
most of the assets were already mortgaged.
I recall in one of the attempts by friends to convince
him to lend me a hand, he declined and asserted that even
if he did, I would again give out the money generously to
people and even acquire more debts for them. The only solution
therefore was ‘self-liquidation’. I resorted
to selling whatever I owned to raise capital to sustain
the coffee project.
The demise of my dear mother, Kaaka Esteri Kokundeka, whom
I adored, too left me devastated. I decided to undergo surgery
on my arm again. The failure of Ugandan doctors to heal
the surgical wound on my arm, compelling me to seek medical
treatment abroad, was also a painful experience. I had offered
my surgical arm as a ‘specimen’ to Ugandan doctors
to set an example that correction of such ailments could
be sought locally.
However, the findings on our local medical capacity were
not encouraging. While in Germany for surgery, I took the
opportunity to hawk Ugandan coffee to prospective customers
since I had no money for advertising. They indeed expressed
interest in the uniqueness of our Ugandan specialty brand.
This was very encouraging and I was convinced that coffee
growers in Uganda would even earn more handsomely if they
were organised into co-operative enterprises and linked
to niche markets to sell their coffee as a value-added product.
I lost six months of time in the development of the coffee
project due to personal setbacks.
At the peak of it, I was rumoured dead at home (Uganda),
while on my way to London, on a working visit to market
Uganda’s coffee as a specialty brand. On my return,
I was received by a mammoth gathering at Entebbe Airport
and I wondered who had instigated the rumours, which caused
a lot of panic among the population.
Divinity Union Limited was able to refinance and operationalise
the debt-ridden and hitherto non-operational Co-operative
Unions (peasant producer groups).
Extension services were offered to producer groups. DUL
earned itself a 3rd rating in coffee processing facilities
created through partnerships with the Unions.
However, these and other efforts (that included entry into
international markets) could not be continued largely due
to financial limitations.
I restructured DUL and created ‘Akiba’ as a
venture capital fund. I also managed to substantially bring
down the debt burden, albeit with limited resources.
“Akiba” is a Kiswahili word that means “reserve”.
It was conceived on realising the private economic sectors’
need to obtain ideas and solutions to the questions on ‘how
to save companies in financial distress, restructure debts,
acquire adequate working and expansion capital, arrange
bridge financing and making mutually profitable joint partnerships’.
The company provides investment banking and consultancy
services. With an empowerment philosophy that seeks to support
initiatives that would leverage the struggle to eradicate
poverty, Akiba considers Coffee Export and marketing as
one of the urgent economic activities that need strategic
Therefore, Akiba’s overall Coffee Strategy is to
provide finance for coffee export, develop effective and
high-value marketing mechanisms in order to improve export
earnings and elevate producer group earnings towards poverty
eradication. We have indeed embarked on promotion of value
addition for export and marketing Ugandan coffee as generic
Akiba developed a farm-to-cup marketing concept as a way
of improving competitiveness of processed Ugandan coffee
on the International market hence increasing our foreign
exchange returns on coffee.
We therefore have established mechanism under which Ugandan
coffee is moved from the farmers, processed into a final
product and sold on the shelves in the customer markets.
In view of our contribution to the development of the coffee
industry, the Office of the Prime Minister of the Government
of Uganda requested Akiba International to provide a concept
paper and a value addition export strategy, which Government
would use in determining the manner and degree of support
for value addition and export promotion of Ugandan coffee.
On the 5th of August 2002, they wrote, “Recently
the Government of Uganda decided that it is absolutely necessary
to discontinue selling Ugandan coffee in the raw form.
The Prime Minister was instructed to find out how persons
dealing with value addition to our coffee can be helped
in order to increase returns on export of Uganda coffee.
Among these persons I consulted Lt. General Salim Saleh
who had already been identified by Government as one of
those involved in value addition to our coffee. It is through
this discussion that I learnt of the recent efforts and
successes by M/s AKIBA International and their partners,
in developing marketing initiatives that will lead to improved
competitiveness of processed Ugandan coffee.
The NRM government under the 10-point programme and now
the 15- point programme led by H.E the President has already
recognised the importance of value addition to Uganda exports.
In order for the Prime Minister to be able to develop a
highly informed position on which initiatives to the private
sector can be supported by Government for effective marketing
mechanisms for our coffee, we need input from those who
are already in this effort. The purpose of Government intervention
To promote value addition for export.
• To increase export returns from the coffee sector.
• To promote generic marketing to give Uganda’s
coffee a competitive presence in the international market.
The purpose of this letter, therefore, is to request you
to provide this office with a concept paper and subsequently,
a detailed value addition coffee export strategy, which
Government will use in determining the manner and degree
of support for the value addition and export promotion of
On the 20th of August 2002, we presented the concept paper
to the Prime Minister and organised a consortium of indigenous
coffee exporters who subsequently met with government to
request for a strategic intervention fund as no private
operator would be in position to meet the related costs
of value addition.
House of Uganda Coffee (HOUC) Ltd.
I met with Abdul Dedya and Kwame Ruyondo (Abdul is a partner
in HOUC based in Denmark) in September 2001 to explore exporting
Uganda’s Coffee as a finished product to the Scandinavian
region. These efforts led to the establishment of HOUC that
commenced in October 2001 as a company, with personal savings
of Shs 35 million.
HOUC established partnerships with the following farmer
• Sebei Elgon Cooperative Union (SECU) and
• Okoro Coffee Growers’ Union
Accordingly, Akiba financed and guided House of Uganda
Coffee (U) Ltd (HOUC) and its Denmark branch HOUC Aps to
procure, process and market high value Uganda coffee in
the Scandinavian countries. There was, however, a need for
additional financing. I came across a banker from Egypt.
He was kind enough to provide a loan of $60,000 from Cairo
International Bank for the processing of the value-added
On the 28th of May 2002, HOUC launched a Ugandan Coffee
generic product branded “Mount Elgon Coffee”
into the European market in Copenhagen, Denmark.
In January, 2003 HOUC Aps signed a contract with a company
that gives Uganda access to the market comprised of 800
HOUC has so far delivered the finished product to 140 of
the supermarkets and this has ranked us 11th among the best
sellers in Denmark. Under the contract with Supergross chain
of supermarkets, HOUC is required to deliver to the market
an average of 7 tons per week. HOUC established only one
year ago has built an impressive market position.
If we don’t respect our part of the bargain and deliver
the said tonnage every week, our product risks being de-listed.
Subsequent marketing initiatives by Ugandan companies may
therefore never be considered in Denmark and other countries
of that region.
I hope government appreciates our application and provides
an intervention fund for value-addition in the strategic
Convincing my partners
When I restructured DUL and managed to acquire some capital,
I was faced with a dilemma of convincing the partners in
HOUC and Akiba to carry forward DUL’s responsiveness
not only to the financial interests of entrepreneurs but
also to the socio-economic interests of the community and
the entire nation at large.
I must admit that the joint ventures were in a business
sense or view not viable to Divinity Union Ltd., as we were
operating with resources acquired by way of loans and the
fact that the unions were highly indebted at risk of losing
Indeed many financial institutions and several stakeholders
in the coffee industry did not support DUL’s undertaking
with the unions, arguing that the resources should have
been invested directly to coffee procurement, processing
and export, instead of deliberate acquisition of unnecessary
liabilities such as those of operationalising redundant
and debt-ridden Unions.
However, for us, DUL was a people-driven enterprise with
an objective, among others, to contribute to the improvement
of household incomes of the peasants. The joint ventures
are indeed a springboard on which efforts of value addition
(the farm-to-cup concept) have been built and have served
to link the peasants to high-value markets.
I did write several reminders to HOUC partners to streamline
their partnership with the unions and allow the farmers
to own a considerable stake in HOUC. When I observed that
the ground was ripe for an offensive, I called for a meeting
of the Board of HOUC to review company activities and share
This I was doing with the subtle plan of convincing them
to assign shares to Sebei Elgon Coffee Union (SECU).
The meeting was held at our offices in Munyonyo on February
I proposed that SECU be offered 49% shares. The Chief Executive
Officer, Akiba, was also concerned that SECU would gain
control of HOUC with such a shareholding. But it is for
these farmers that I have set-up the coffee project, including
borrowing and selling my assets to raise start-up capital.
I also think am playing an economic role for the National
Resistance Movement and I understand when my partners disagree
with my views since we are of a different type of cadres.
I mentioned earlier in this book that the foundation of
my views “bears root in the training I was exposed
to in Mozambique.”
We analysed how Europe under-developed Africa. Imagine
thirty years later, Africa is still suffering from the same
syndrome. We buy value-added products at exorbitant prices
from developed countries moreover whose raw materials originate
This economic set-up is unfair and must be reversed. It
is for this reason that I have sacrificed so much time and
financial resources to contribute to value-addition for
the coffee industry.
Therefore, my undertaking to develop the coffee project
is imbued in an ideological intention rather than a business
by an ordinary entrepreneur motivated by profit making.
I am not a shareholder in HOUC but the calling (February
6, 1998 Tarehe Sita Statement) in which I undertook to invent
tools for poverty eradication has been catered for.
I understand the world economic order better, and have
penetrated the heart of coffee consumption. After long deliberations,
the board meeting resolved that SECU be offered 40% of the
shares. The transfer was legally registered.
By assigning shares to the peasants we have set-up a structure
that ensures their share in the chain of value addition.
This is a demonstration that the rewards of capital and
labour can be shared equitably. It would also safeguard
the socio-economic impact approach that is also the backbone
of HOUC marketing.