Legislators have questioned a supplementary expenditure of Shs2 billion by the Cotton Development Company (CDO) on transport rebate for Fine Spinners Cotton Company Limited.
Members of Parliament on the Committee of Agriculture expressed disappointment with the decision of CDO to request the Shs2 billion shillings to Fine Spinners under the Buffer Stock Revolving Fund, without considering Southern Range Nyanza which is also a beneficiary of the same fund.
The committee was receiving a justification from CDO for the supplementary expenditure of Shs9.5 billion in the 2022/2023 financial year under the Buffer Stock Revolving Fund on Monday, 13 March 2023.
The CDO Board Secretary, William Wegowachi said that Fine Spinners requested the transport rebate following the global effects of the Covid-19 pandemic.
“Prices of all commodities went up and cotton was not spared. Fine Spinners wrote to the Ministry of Finance explaining that they procured locally produced cotton from the ginners who quoted prices in reference to international markets which is a landed cost at the final destination,” said Wegowachi.
He added: “As such, this makes their final products less competitive on the international market since their primary cost of production was very high. They, therefore, requested for transport rebate which was approved by the government”.
He said that CDO is not aware whether Southern Range Nyanza also requested a transport rebate.
This prompted the Committee Chairperson, Hon. Janet Okori-Moe to question the relationship between CDO and Fine Spinners, saying that the Covid-19 pandemic affected Southern Range Nyanza as well.
“Don’t you think the other company also suffered the effects of Covid-19 and yet they were not given funds? Who will now cover that gap on their behalf?” Okori-Moe asked.
Ngora District Woman MP, Hon. Stella Isodo said that CDO acted negligently by not ensuring the provision of funds to both companies.
“If CDO is not aware that Nyanza did not request for transport rebate, who then should have known? This is a statement of negligence,” said Isodo.
Hon. Mary Begumisa (NRM, Ssembabule District) accused CDO of failing to ensure equitable distribution of funds to the two companies.
Okori-Moe also tasked CDO to justify the government’s continued capitalization of the Buffer Stock Revolving Fund since 2015 to the tune of Shs20.55 billion.
“Is there any success in the operation of this revolving fund since its inception? Has the cotton industry attracted any investors,” she asked.
Wegowachi said that government expects investors from Ethiopia who have expressed interest.
“We have potential investors because of the incentives and readily available raw materials. Ethiopia does not have adequate raw materials,” said Wegowachi.
He added that out of the 90 per cent of raw materials produced, only 20 per cent is locally consumed while the rest is exported.
“Uganda has exported to America, Canada and Europe. We have high-quality products because whatever is produced matches international standards. Our cotton is well-graded,” he said.
He, however, called for the implementation of Buy Uganda, Build Uganda (BUBU) saying that this will increase the return on investment for the farmers.
“The domestic market still needs to be exploited. We suggest that it is made compulsory for the Ministry of Health and all Universal Primary and Secondary schools to buy uniforms from our factories,” said Wegowachi.
The operation of the cotton Buffer Stock Revolving Fund implemented by CDO started in 2014/2015 to increase the competitiveness of local textile millers/spinners relative to other world operators including enhancing value addition.
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