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Govt closes multibillion sugar factory in Namayingo

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Over 600 people have lost their jobs following government’s order to close the CN sugar factory in Namayingo district.

The closure of the factory followed the alleged failure of the CN factory to establish a nucleus estate of at least 500 hectares before erecting the mill.

“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,’’ part of the letter dated June 17, 2024 reads.

In the letter signed by the Minister of Trade, Industry, and Cooperative, Francis Mwebesa, addressed to the director of CN Sugar Ltd., said 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 conveniences caused are highly regretted, the letter further reads.

The Namayingo District Chairperson, Ronald Sanya, said currently 600 people have been employed at the construction site of the factory but are now jobless.

“Closing the factory is a double tragedy because most of the youths had been suspended from the lake and they have been jobless,’’ he said.

Sanya said they are to petition President Museveni to intervene in the issue because CN Sugar Ltd. is the only industry that has been constructed in Namayingo since its inception.

The Namayingo District Vice Chairperson, Abdallah Twaha Kawuta, said they have been expecting revenue that was going to improve service delivery in the area.

“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 Shs200m. We expected our revenue to triple with the establishment of CN Sugar Ltd. that has been closed,’’ he said.

Kawuta said the community around the factory benefited in terms of corporate social responsibility.

“Where these factories exist, they improve the health system of the area, water, and education by establishing schools; they help the orphans and the elderly,’’ he said.

The manager of CN Sugar Ltd., Rashid Kakungulu, said they have enough acres of sugarcane, which the Ministry wanted.

“We have bought 1300 acres because they told us to buy land, yet they only need 1250 acres. 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 $12m with Shs1billion taxes on importation of the materials.

“We have not yet elected the machines, but the construction of the factory is at 40 percent complete, with $6 million so far invested unless the government compensates the investors with $15 million, but we vow not to leave the area,’’ he said.

He added that “The Minister gave us a license authorizing us to construct the stores, staff quarters, perimeter walls, and canteen. The out growers have spent a lot of money planting sugarcane, then revoked by the same minister,” he said.

Mark Simunyu, one of the residents of Kifuyo village, Buyinja subcounty in Namayingo, has asked the Minister to compensate them because some have sold grave yards to allow the establishment of a factory.

“People have given in their land. If the Minister is revoking it now, how is he planning to compensate every person who sold their land?’’’ he said.

The General Secretary of the Busoga Sugarcane Out Growers Association, David Christopher Mombwe, said instead of the government working on the fluctuating price of sugar cane by setting a minimum price, they are busy closing the few factories in Busoga, which has solved the unemployment in the area.

The Chairman of the Uganda Sugar Manufacturers’ Association (USMA), Jim Kabeho, said it’s too late; they should revoke all of the licenses issued after 2020 because they’re all illegally issued.

The closure of the CN sugar factory came at a time when USMA, in July 2022, petitioned the Ministry of Trade, demanding the process of licensing more mills within the Busoga Sub-region be halted because it caused an unstable supply of cane in the area.

CN Sugar Factory is among the seven factories that were allegedly licensed by the Ministry of Trade across the sugar cane growing areas in the country, despite the absence of the Sugar Board.

USMA claims that they should not be in close proximity of the existing sugar mill in the 25-kilometer radius because it contravenes the sugar policy.

In November 2022, legislators sitting on the Parliamentary Committee on Trade, Industry, and Tourism blamed the Minister for Trade, Francis Mwebesa, for usurping the powers of the Uganda Investment Authority and issuing licenses to the new seven sugar mills to operate in Busoga and Buganda.

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

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