CASH CRISIS HITS UGANDAN COFFEE BOARD
Uganda's state-run Coffee Marketing
Board (CMB) has been suffering a cash crisis for the past two
months due to a bottleneck in export shipments and
administrative delays in handling payments, trade sources said.
    The CMB needs between 10 and 15 billion shillings (the
equivalent of seven to 10 mln dlrs) to pay farmers and
processors for coffee already delivered, but its present export
revenue is insufficient to cover such expenditure, they said.
    The board's cash crisis has serious implications for the
economy as a whole, since coffee accounts for 95 pct of
Uganda's total exports.
    The CMB's financial difficulties first started in January
following delays in rail-freighting export consignments of
coffee to the ports of Mombasa, Dar es Salaam and Tanga.
    These delays were caused by a shortage of railway wagons in
Uganda and bottlenecks on the ferries which transport Ugandan
wagons across Lake Victoria to link up with the Kenyan and
Tanzanian railway systems, the sources said
    Marketing Minister John Sebaana-Kizito publicly
acknowledged on February 19 that the CMB had run up arrears to
local suppliers as a result of the shortage of transport for
moving exports.
    Sebaana-Kizito said at the time that the payments squeeze
would be resolved in two weeks.
    However, an accident to the rail ferry which plies between
the Ugandan lake port of Jinja and Kisumu in Kenya put it out
of action between February 21 and March 15, causing fresh
delays in cargo movements.
    Coffee exports are especially sensitive to the disruption
of rail transport since president Yoweri Museveni has banned
their haulage by road in a drive to save transport costs.
    Transport difficulties meant that by early February the CMB
was holding unsold coffee stocks of around 750,000 bags.
    These stocks were equivalent to one quarter of Uganda's
expected three mln 60-kilo bag 1986/87 (October-September)
crop, the sources said.
    According to the sources, the board's financial problems
have been aggravated by long delays in processing export
receipts.
    The coffee board was taking about eight weeks to recycle
export receipts into payments to local producers, whereas
export bills handled by local banks took half that time to
process, they said.
    The sources said the CMB's price structure had been
overtaken by Uganda's high inflation rate, unofficially
estimated at about 200 pct, and that this was a further
disincentive to producers, already owed large arrears.
    "The coffee pricing structure is wrong and three months
behind, the foreign exchange rate is unrealistic, and the
sooner the so-called economic package is put in top gear, the
better for the coffee industry and the economy as a whole," one
of the sources said.
    The government is currently negotiating a package of
economic reforms with the World Bank and International Monetary
Fund aimed at underpinning a renewed inflow of foreign aid to
help Uganda's economic recovery after 15 years of political
strife.
 REUTER
