Coffee Sector Poised for Transformation with Value Addition, Industrialisation

With initiatives like the Africa Coffee Park and government-backed efforts to support farmers, the country is well-positioned to strengthen its global coffee market share.

Uganda’s coffee industry is at a pivotal moment, with stakeholders emphasizing the need for value addition and industrialization to maximise the sector’s economic potential.

During a convening at the Africa Coffee Park in Rwashameire, Ntungamo District, government officials, investors, farmers, and community leaders discussed strategies for boosting revenue, improving production, and strengthening Uganda’s global coffee brand.

As Africa’s second-largest coffee exporter, Uganda’s coffee industry supports the livelihoods of approximately 12 million people.

With 126 out of 135 districts engaged in coffee production—mainly in central, eastern, and western regions—the sector contributes between 15-17% of the country’s export earnings.

In 2024, Uganda exported 6.37 million bags of coffee worth $1.55 billion, marking a 4.12% increase in quantity and a staggering 60.61% rise in value compared to 2023.

Nelson Tugume, CEO of Inspire Africa Group, outlined the vision behind the Africa Coffee Park—a game-changing initiative expected to introduce at least 12 coffee-based products, ranging from roasted coffee and energy drinks to beauty products.

He highlighted Uganda’s limited share in the global coffee market, noting that of the $460 billion generated worldwide, producing countries earn only $26 billion, with Uganda receiving just a fraction.

"Of the total global coffee export earnings of $460 billion, producing countries earn $26 billion, and yet Uganda gets less than a billion," Tugume remarked.

The CEO of Vision Group, Don Wanyama, emphasised that while Uganda’s coffee production volumes are commendable, revenue generation must match this growth.

He urged farmers to see value addition as more than just roasting but as an opportunity to elevate Uganda’s coffee brand.

"Production in terms of volume is good, but there is more money to be made. You can't produce so much and yet earn so little," Wanyama stated.

Despite the sector’s impressive growth, financial barriers remain a significant hurdle for coffee farmers, particularly in western and northern Uganda.

According to the Deputy Director of the Bank of Uganda, Dr Bazinzi Nagamba, only 21% of the Shs985 billion disbursed through the Agricultural Credit Finance Facility since 2009 has been accessed by farmers in western Uganda.

He noted that high risks on non-performing loans and high-interest rates have discouraged farmers from seeking credit, while the lack of collateral remains a challenge for many.

Additionally, farmers in northern Uganda—despite their increased coffee farming efforts—struggle with financing due to restrictions imposed by financial institutions.

Addressing these issues is crucial to ensuring sustainable growth and supporting farmers in maximizing their earnings.

The Permanent Secretary to the Treasury (PSST), Ramathan Ggoobi, reaffirmed the government’s commitment to agro-industrialisation as a key pillar for economic transformation.

He emphasized that value addition is the future of Uganda’s coffee industry and assured stakeholders that the government is dedicated to recruiting more agricultural extension workers under the National Development Plan 4.

"Uganda is strategically positioning itself for a tenfold growth in GDP, targeting $500 billion. Agro-industrialization alone is expected to bring in $20 billion annually by 2040," Ggoobi stated.

He also highlighted the need for a stable electricity supply to support industrialization, revealing that discussions with the Ministry of Energy are underway to establish substations near key production areas such as the Africa Coffee Park.

As discussions around value addition and industrialization gain momentum, Uganda’s coffee sector is set for a significant transformation.

With initiatives like the Africa Coffee Park and government-backed efforts to support farmers, the country is well-positioned to strengthen its global coffee market share.

By prioritizing investment in production, supply chains, and branding, Uganda has the potential to move from being just a leading producer to a dominant player in the international coffee value chain.