Tag: Uganda

  • KT&G Provides Water Filters to Uganda

    KT&G Provides Water Filters to Uganda

    Photo: KT&G

    KT&G is providing 400 environmentally friendly water purification devices worth KRW110 million ($81,406) to 94 primary schools in Uganda. Park Hyeon-seok, KT&G’s Tanzania materials branch manager, attended a distribution ceremony on April 30 in Hoima City, at the heart of Uganda’s tobacco-growing area.

    Out of approximately 49.9 million nationals, 9.2 million lack access to safe drinking water, according to According to Uganda’s Water Environment Authority. This contributes to the spread of waterborne diseases such as cholera, and typhoid fever, leading to high infant mortality rates and social issues.

    The gravity-fed filtration devices supplied by KT&G will not only address Uganda’s drinking water hygiene issues but also replace the traditional water purification methods that involve boiling water using wood and charcoal, thereby saving the equivalent of up to 3,500 tons annually in carbon emissions.

    Exporting to more than 130 countries, KT&G says its tries to help solve various social issues in countries where it operates, especially in developing nations. In 2021, KT&G also supported a Tanzanian primary school by providing 1,300 water purification units. Additionally, the company has implemented CSR activities tailored to the specific conditions of various countries. These initiatives include supporting vocational training centers in Indonesia, establishing agroforestry education centers in Mongolia, and constructing schools in Laos.

    “We hope that this water purification support will help improve the sanitary conditions in Uganda,” said Shim Young-Ah, director of KT&G’s ESG management office, in a statement. “As a global corporate citizen, we will continue to focus on and fulfill our social responsibilities to countries in need.”

  • BAT Uganda Impacted by Illicit Trade

    BAT Uganda Impacted by Illicit Trade

    Photo: Taco Tuinstra

    BAT Uganda’s 2022 performance was impacted by the country’s slow economic recovery and growing illicit trade, according to a report in The Independent.

    Gross revenue increased by 6 percent to UGX99.5 billion ($27 million) driven by higher sales volumes. However, general inflation rates drove up the cost of production by 15 percent, causing after-tax profits to drop 6 percent.

    “Whilst the fundamentals of our business remain solid as evidenced by our sustained investment in the country for 95 years, the increasing incidence of illicit trade in Uganda remains a major threat to the sustainability of our business going forward,” said BAT Uganda Managing Director Mathu Kiunjuri during the company’s annual general meeting on July 6.

    The incidence of illicit cigarettes rose from 23.8 percent in December 2021 to 29.4 percent in December 2022, according to industry research.

    According to Kiunjuri, the government loses up to UGX30 billion annually to the illicit cigarette trade. Third-party research indicates that most illicit cigarettes are mislabeled as exports or smuggled in from neighboring countries.

    Uganda is reportedly also increasingly becoming a source of illicit cigarettes in regional markets such as Kenya.

    A recent market study revealed that several BAT Uganda and BAT Kenya brands intended for sale in other countries end up in shops in Uganda.

    Despite the challenges, Kiunjuri praised the Uganda Revenue Authority  (URA), which he said has made significant progress in fighting the illicit cigarette trade. “However, for meaningful and lasting impact, it is critical that government redoubles its efforts, including ramping up multi-stakeholder and cross-border collaboration to ensure effective enforcement and enhancement of anti-illicit trade regulations,” he said.

    According to the URA, cigarette smuggling accounts for up to 27 percent of smuggled goods in Uganda, with the Supermatch brand accounting for more than 90 percent of the seized cigarettes.

  • BAT Donates Cigarette Destruction Machine

    BAT Donates Cigarette Destruction Machine

    Photo: Taco Tuinstra

    BAT has donated a Hammermill cigarette destruction machine to the Uganda Revenue Authority (URA) to support the national fight against illicit cigarette trade, reports the PML Daily. 

    Receiving the machine at the URA head offices in Nakawa, acting Commissioner of Customs Okaka Godfrey said that the Hammermill will provide a more convenient and cost-efficient way to destroy illicit cigarettes compared with manual methods. 

    The acquisition of the machine follows a report by Kantar suggesting that nearly one-third of the cigarettes sold in Uganda are illicit. More than half of these illicit cigarettes are manufactured in Uganda for export, with the rest being manufactured in other countries before being smuggled into the country. 

    The government misses out on an estimated USH30 billion ($8.01 million) in tobacco tax revenues each year due to the illicit cigarette trade. BAT attributes a recent 41 percent drop in tax remittances to the URA to competition from the illicit market.

    According to BAT Managing Director Mathu Kiunjuri, the illicit trade problem has become worse recently. This year, the share of the illicit market has increased to 27.5 percent from 23.8 percent in 2021 and 15.4 percent in 2020.

    Between 2019 and 2022, URA enforcement teams seized more than 293,099 cartons of illicit cigarettes valued at $340,000. The major brand intercepted was Super Match made in Uganda for export, followed by high end brands such as Dunhill, Business Royal and Sportsman.

  • Uganda Promoting Local Cigarette Production

    Uganda Promoting Local Cigarette Production

    Photo: Taco Tuinstra

    Uganda’s Parliament has passed a bill scrapping taxation on processed tobacco and restricting it to unprocessed leaf for export, the Parliament’s website reported. The measure is meant to promote local value addition and improve revenue.

    According to finance committee chairman Henry Musasizi, levying tax on both processed and unprocessed leaf will undermine the efforts of companies that have set up plants to process it locally and justify the efforts of those companies that moved out of Uganda.

    “We shall also experience an increase in contraband and smuggling of cigarettes into Uganda, loss of jobs to Ugandans working in the processing plants and stifle agri-industrialization,” Musasizi said.

    Representative Syda Bbumba said that an export levy on unprocessed tobacco should be charged to discourage its exportation and encourage local processing of the product.

    “Tobacco growing is already exploitive on our farmers and, therefore, we should encourage value addition. We also need to increase the levy on imported cigarettes to encourage those processing tobacco to manufacture it locally,” she said.

    Representative Solomon Silwany said that the government should focus on the unprocessed leaf and tax it at a rate of $1 per kg. “We have local companies that are struggling to process and employing people; this should be our opportunity to support and encourage them to produce cigarettes as a finished product,” he noted.

    The Minister of State for Finance David Bahati, however, said that the local companies should make sure the tobacco leaf is dried and manufactured into cigarettes.

    “We do not want to be confused by these people simply drying the tobacco leaf to skip taxes instead of the more worthwhile process of manufacturing cigarettes,” he said.

  • BAT Uganda ‘Resilient’ in Difficult Environment

    BAT Uganda ‘Resilient’ in Difficult Environment

    Photo: Taco Tuinstra

    British American Tobacco Uganda (BATU) reported first-half 2020 results with gross revenue down by 12 percent to UGX76 billion ($20.6 million) and pre-tax profits at UGX9.9 billion.

    “I am pleased to report that BAT Uganda’s business continues to show resilience despite the difficult operating environment in the country,” said BATU Managing Director Mathu Kiunjuri.

    “With rising unemployment and a significant increase in the cost of various basic consumer goods, the [Covid-19] pandemic has left many consumers more cash stretched than ever. Additionally, the closure of retail outlets led to constrained consumer access to our products. Despite these challenges, our business continues to be resilient due to prudent cost management measures undertaken to mitigate the decline in revenue.”

  • Tobacco control in court

    Uganda photo
    Photo by Leandro’s World Tour

    The merits or otherwise of Uganda’s Tobacco Control Act (TCA) are to be fought out before the country’s Constitutional Court, according to a story by Anthony Wesaka for the Daily Monitor.

    The TCA came into force on November 28, 2015.

    Through the Attorney General (AG), the government is defending the TCA on the grounds that the restriction of the use of tobacco in public places is proportionate given the harmful effects tobacco use has on the health of consumers.

    In addition, the government says that a TCA requirement for graphic health messages that occupy no less than 65 percent of the principal display area of cigarette packs is intended to communicate the harmful effects of tobacco use to all, including the illiterate and children.

    Meanwhile, a civil society organization, the Centre for Health, Human Rights and Development, has applied to the court to join the government in defending the TCA ‘on behalf of the general public’.

    The government’s defence is being mounted in response to a court petition filed by British American Tobacco challenging a number of provisions of the TCA.

    BAT is said to maintain that the 65 percent health warning unreasonably encumbers the use of its trade marks on product packaging, as protected under the Trademarks Act 2010, and also impacts on the goodwill associated with its brands.

    In its main petition before the court, BAT contends that the TCA Act has the effect of unjustifiably singling out the tobacco industry for discriminative treatment and amounts to a ban on the right to trade and consume a legal product, which contravenes the right to freedom from discrimination.

  • AOI to enter Uganda

    Alliance One International (AOI) has announced its intention to enter the Ugandan tobacco leaf market once all relevant governmental approvals and licenses, including registration of its new Ugandan subsidiary, Alliance One Tobacco Uganda (AOU), are complete.

    AOU’s core business plans to include providing agronomy services to tobacco growers through an integrated production system that supports sustainable compliant tobacco leaf production. To execute on its plan, AOU expects to employ agronomy and support staff in Uganda, drawing from local talent to develop a dedicated country team. To meet first-year production goals, AOU intends to register and sponsor farmers that produce both flue-cured and burley tobaccos for the upcoming 2015 crop.

    “Once complete, the addition of Uganda to our existing African footprint further strengthens our regional position as a leading supplier to both new and existing customers,” says Pieter Sikkel, AOI’s president and chief executive officer.

    “Ugandan tobaccos have a good range of quality flavor and semi flavor styles that complement tobaccos from our other supply origins. We are excited about the heightened prospects for Ugandan tobacco on the world market.”

     

  • African Pride

    African Pride

    Photos: Pan African Tobacco Group

    Constructing a new GLT in Uganda, Pan African Tobacco Group underscores its commitment to its home continent.

    By George Gay

    As its name implies, the Pan African Tobacco Group (PTG) has its roots firmly set in the African continent. It employs thousands of Africans at its tobacco processing and manufacturing plants, and throughout its distribution chains, and it supports many others in sourcing its leaf tobacco and manufacturing supplies. In short, its interests are closely tied to those of Africa and its people, and, I suppose, it is true to say that the interests of Africa and its people are closely tied to companies such as PTG.

    An example of this close relationship was on display earlier this year when PTG’s founder, Tribert Rujugiro Ayabatwa, announced the investment of $20 million in a new green-leaf threshing plant and warehouse at Arua, Uganda. The first sentence of the announcement included the news that the plant would directly create 700 new jobs—100 permanent and 600 seasonal—and support thousands more throughout Africa. In fact, later it was stated that the project was set to create 150 permanent and 1,000 seasonal jobs once the new plant was fully operational. The plant’s operations will help support 23,000 tobacco growers: 13,000 in Uganda and 10,000 in the Democratic Republic of the Congo (DRC) and South Sudan. And its operations will mean that PTG will have to contract with about 1,500 drivers to transport the plant’s output from Arua to the company’s factories at Kampala, Uganda; Bujumbura, Burundi; Dar es Salaam, Zanzibar, Tanzania; Yei, South Sudan; and Goma, DRC.

    The new plant will include a 30,000-square-meter warehouse and a factory for processing up to 10 tons of green tobacco an hour.

    Tribert Rujugiro Ayabatwa

    But surely one of the most interesting aspects of the project came to light when I asked the question: Is there anything about the plant under construction that is unusual? “Yes,” Ayabatwa said. “PTG is committed to developing the communities where it operates; it positions its plants in areas where there is no basic infrastructure such as water, electricity, etc. …” This was not the usual sort of response to such a question, and it was not the one I had been expecting, but it again illustrated the sort of social investment that PTG seems to making: The plant will simply have to provide water and electricity.

    There was little surprise then that Uganda’s state minister for trade, industries and co-operatives, David Wakikona, who was the guest of honor at a groundbreaking ceremony on May 17, described the plant as a landmark moment for the country and region. Calling the new facility a job creator and a timely investment, he praised PTG for its commitment to improving tobacco production and the quality of exports to other regions.

    “This factory of such funding magnitude in a rural setting like Arua is a landmark in the history of Uganda,” Wakikona said. It was especially important, he added, because of the jobs that would be created, and because of the associated amenities that would benefit the rural population and put more money into the pockets of local people.

    PTG already has a strong presence in northern Uganda, where it invests $18 million a year in tobacco farming. And that amount was expected to double during the next five years to meet demand, Ayabatwa said. “This expansion will allow us to create new, good-paying jobs in an important part of Africa,” he added. “It will also allow us to farm and process tobacco more efficiently and cost effectively. I couldn’t be more delighted with this investment.”

    The company buys about 15 million kg of leaf tobacco a year, largely flue-cured, burley and dark fire-cured, from Angola, DRC, Tanzania, Uganda, Zimbabwe and Brazil. Some of the tobacco is sourced from contract farmers, some from PTG’s direct commercial-farming operations, and some from Africa’s auction floors, while the rest is bought under annual contracts with international dealers.

    When I asked how PTG ensured, in a competitive world, that it paid tobacco farmers fair prices, Ayabatwa said that PTG believed in the long-term sustainability of the tobacco industry in Africa. “Not only do we make sure that a fair price is paid to both our farmers and small growers, but we also invest in social and environmental responsibility initiatives in the communities where we operate,” he added.

    This raised a question about how PTG ensured the tobacco it bought was grown in a sustainable way. “PTG trains and supports farmers and food crops by supplying food seeds and running a reforestation program,” said Ayabatwa.

    Strong fundamentals

    Currently, PTG has two green-leaf threshing plants, one in DRC and one in Uganda, which thresh and pack flue-cured, burley and dark fire-cured leaf. And the company operates nine manufacturing plants, seven of which have their own primary departments.

    The company produces at its manufacturing plants a range of local cigarette brands and five that have a pan-African presence: Forum, Legends, Peterfields, Supermatch and Yes. Most of its cigarettes are Virginia blends, but it offers also American blends. All but one of its cigarettes are filtered, with tar and nicotine levels that vary according to the regulations in the country of sale, but that, generally, are around 10 mg and 1 mg, respectively. Formats include king-sized and 100 mm cigarettes, and packs are both hinge lid and soft cup.

    PTG said it was constantly developing new cigarette brands and line extensions, and that it also manufactured roll-your-own and pipe tobaccos. And, like any other tobacco manufacturer, it followed international trends when it came to considering the introduction of alternative tobacco products and, even, e-cigarettes.

    The company distributes its tobacco products using what Ayabatwa described as a competitive mix of company-owned and third-party distributors, depending on the country.

    Ayabatwa didn’t want to disclose how many cigarettes PTG sold each year, but he said the number was increasing because of growth in the African market. And he seems confident about the future of the tobacco industry. “Despite the anti-smoking lobby, tobacco will always be one of the major, fast-moving products offering pleasure to those who choose to smoke,” he said.

    When I asked Ayabatwa whether PTG was a profitable company, he replied that, “on a group level it meets industry standards but reinvests to sustain its growth and development.” And when I further asked whether profit was increasing year on year, he said, “Yes, but this profit increase is used to reinvest in new markets.”

    Passing the baton

    If these answers sound slightly different—more equivocal, perhaps—than those you might expect to receive from a successful entrepreneur who has built up a group of businesses that, alongside tobacco, include cement, tea, plastic shoes, beer and snack foods, it’s not just that Ayabatwa dares to be different. When, in January, he announced that he was retiring from the daily operations of PTG, he made the point that making money had never been his goal but a means to an end—the end being “building something up, creating something.” “That is what I tried to accomplish, and that is the legacy I leave to my sons and son-in-law,” he said.

    I guess that to say he was successful is something of an understatement. From his roots as a young Tutsi in Rwanda and a refugee in Burundi, Ayabatwa overcame overwhelming odds to build up a group of businesses that employ about 26,000 people (who support about 182,000 people) from South Africa to the United Arab Emirates, from Angola to Tanzania.

    But, now, he has left all that to Paul Nkwaya, his eldest son, who serves as the group’s marketing director; his youngest son, Richard Rujugiro, who is technical director; and his son-in-law, Serge Huggenberger, who is financial director.

    Ayabatwa is continuing to advise his sons and son-in-law on company management but is also spending more time on his charitable endeavours. Over the years, he has financed hundreds of scholarships for primary, secondary and university students and—along with his PTG companies—has engaged in numerous other charitable works, including donating cement for area infrastructure, providing seedlings and food to farmers and factory workers and offering job training to unemployed African widows.

    And, given his background, it will come as no surprise that he is developing a foundation mainly to help aspiring African entrepreneurs. Separate from PTG, Ayabatwa is developing a private, nonprofit foundation to provide startup capital, training and education to aspiring African youth. The foundation will offer internships to African engineering students so they can gain the practical experience they need to succeed.

    But, returning to PTG for a moment, I asked how Ayabatwa saw the future for the company. “PTG has established its roots in Africa over the past decades and will continue to grow in line with industry standards and the African economy as a whole,” he said. “We have no doubt that, although it will always retain its African identity with pride, the future of the group will extend far beyond the continent in the coming decades.”

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.

  • Pan African Tobacco builds new factory

    The Pan African Tobacco Group recently broke ground for a $20 million tobacco processing factory in Arua, Uganda. The new facility, which includes a 30,000 square meter warehouse, will have a production capacity of 10 tons per hour.

    “As part of this expansion, PTG will manufacture high quality products, while creating hundreds of well-paying jobs in sub-Saharan Africa,” said Tribert Rujugiro Ayabatwa, the founder of PTG. “I am delighted to announce that our projects are in progress.”

    David Wakikona, Uganda’s trade minister, laid the factory’s first stone during a ceremony on May 20. He described the site as a source of jobs and timely investment, while praising the commitment of PTG to improve tobacco production and the quality of exports to other regions.

    “The opening of a plant of this size in a rural area is a defining moment in the history of Uganda,” said Wakikona. “It is all the more important given the jobs that will be created.”

    Upon completion, five months from now, the factory will employ 200 permanent and 2,000 seasonal workers. It will also contract with 1,500 drivers to transport its products to destinations throughout the region. The number of Arua leaf growers supplying PTG will increase to 13,000.

    PTG already has a strong presence in the region, where it invests $18 million a year in tobacco cultivation.

     

     

  • WHO to conduct tobacco cost-benefit analysis

    A team of 20 WHO researchers will conduct a study in Uganda to determine the country’s earnings from the tobacco industry and costs incurred from treating people with tobacco-related illnesses, reports Monitor.

    According to the Uganda Demographic Health Survey 2011, about 15 percent of males and 3 percent of females aged 15-49 use tobacco products. Statistics show that tobacco-related illnesses claim about 13,500 lives in Uganda annually. The government raises UGX80 billion ($30.9 million) per year in tax revenue from tobacco companies.