Coffee Scandal: How Nelson Tugume Tricked Museveni; Diverted Shs 21bn to Own Factory in Ntungamo

The funds taken by Tugume for his private coffee enterprise is almost higher than the 2023/2024 financial year budget (Shs 22bn) which the government allocated to cater for the allowances of medical interns and senior house officers across Uganda

Museveni in a group photo with Coffee Investment Consortium Uganda (CICU) officials at State House Entebbe in 2023

On March 23, 2023, President Museveni held a meeting at State House Entebbe with National Resistance Movement (NRM) Parliamentary Regional Whips to promote the idea of supporting a consortium of several coffee exporters.

The meeting was also attended by a consortium of 15 companies dealing in the production and export of coffee.

The Coffee Investment Consortium Uganda (CICU) leader Nelson Tugume told the President during the meeting that “about 10 million US Dollars, approximately 37 billion Uganda shillings is needed in the first phase to export the required quality and quantity of processed coffee to the Balkan states and other markets that have opened as a result of quarrel between Russia and the West.”

On the government side, the meeting was attended by among others; the Prime Minister Rt. Hon. Robinah Nabbanja, the Government Chief Whip Hon. Hamson Obua and the Attorney General Hon. Kiryowa Kiwanuka.

Odrek Rwabwogo who heads the Presidential Advisory Committee on Exports and Industrial Development (PACEID) would later defend Tugume’s proposal to the President, saying Ugandan firms had limited market presence for years due to lack of capital.

“5 of the 13 sectors now have orders of up to USD550m and we have created a revolving fund for firms to help underwrite invoices to help them supply these orders,” he observed.

The export promotion strategy marketed before the President was that Uganda coffee exporters usually obtain orders worth millions of dollars from overseas but lack capital to fulfil these orders.

President Museveni advised that government should provide $10m to Uganda Development Bank (UDB) from which members of the coffee promotion consortium would obtain quick funds to ship coffee to foreign countries. 

Tugume speaking at a State House meeting in 2023

However, members of the consortium reportedly persuaded Museveni to release the money directly to their consortium to avoid the bureaucracy of UDB.

Rwabwogo later explained that “The coffee fund to underwrite invoices is for 21 coffee firms,” adding, “And if you need to visit each of the 21 coffee firms under the coffee consortium, please do. Odrek doesn’t trade in coffee and my only interest is to help our country raise new revenue instead of unhinged consumption. The people who criticise our work and do nothing are often engaged in.”

Abuse of public funds?

Interestingly, as soon as the coffee consortium received the funds, Nelson Tugume, the controversial and elusive businessman took a staggering Shs 21bn out of Shs 31bn received from the government for the promotion of coffee exports.

Several members of the consortium such as Jackie Arinda of Jada Coffee, Kwezi Kutesa of Kwezi Coffee and Gerald Katabazi of Volcano Coffee quit the consortium, with Arinda accusing Nelson Tugume of failing to account for the funds.

Arinda said the “consortium has lost direction and members don’t know what is going on” and that Tugume, “is not accountable at all and no longer holds meetings to update members on the progress of the consortium’s work.”

The consortium has since issued a statement, saying it received Shs 28bn through the Science, Technology and Innovation Secretariat at the Office of the President (STI-OP) on 28th September 2023.

“For emphasis, the grant was solely for a coffee value addition innovation project for CICU and its members only. The development of the largest coffee value addition facility in Uganda situated in Ntungamo with a full capacity output of close to 10,000MT of roast and instant coffees,” said the consortium’s official, Tony Miiro Kibuuka in a statement dated January 17, 2024.