Stakeholders in the agro-processing sector have appealed to the Government to increase import duty on starch from the current 10% to 35%.
They made the appeal on Tuesday while appearing before Parliament’s finance committee chaired by Amos Kankunda (Rwampara County, NRM).
The stakeholders’ team was led by Ramesh Babu, the founder of the pharmaceutical company Abacus based in Mukono district.
Kelly Wanda, the chairperson of the National Cassava Platform of Uganda, said the move will not only enhance local production but also spur socio-economic transformation.
He said the current 10% import levy has failed to tame the influx of cheap starch imports from countries such as India, Egypt and Thailand, which has made local starch uncompetitive on the market.
“Egypt uses grains imported into the region and then it exports here. VAT on cassava starch would enhance the competitiveness of Uganda’s starch industry within the East African Community, Common Market for Eastern and Southern Africa and Africa, leading to more exports, import substitution and employment. This leads to a higher value of revenue from corporate tax because you will have many people setting up investments,” he argued.
Investors speak out Since 2023, Babu has been running a cassava starch processing plant known as PURA Organic in Nakasongola district. The firm supplies products across the East African Community. Babu said he would soon double output.
“Right now, we are processing up to 600 tonnes of cassava a month. We are increasing the production capacity to raise this to 3,000 tonnes a month. We are already supplying cassava starch to local manufacturers and in addition, I am also exporting to Kenya,” Babu said.
“I think the plant will be ready in another 15 days. I put cassava on one side and collect starch on the other. Right now, the process is too long. It takes two days and depends on the climate. I collect the starch on the other side. First, I convert cassava into milk, which is then taken to the tanks. And then we have to dry it. However, now it will be automatic,” he added.
While the demand for Ugandan starch remains limited, especially in European and Chinese markets, he pointed out that operational costs remain high.
“One kilogramme of cassava for processing needs six litres of water. If I want to process 100 tonnes, I need water worth sh600,000,” the founder of Abacus explained.
While some factories are lucky to produce their own power using bio-digesters, other sector players such as Rebecca Namugwanya who is engaged in high-quality flour production, contend that energy remains a key challenge.
The current Value Added Tax (VAT) Act specifies that grains and cereals grown and milled in Uganda are zero-rated.
However, Namugwanya says they also want root crops added for fairness. Furthermore, she appealed for a change of policy on wheat.
“You know, in Uganda; we import quite a lot of wheat. We can have wheat blended with high-quality cassava flour for all Ugandans and that is going to keep them healthy,” Namugwanya said.
Chipping in, MP Karim Masaba (Mbale Industrial Division, Independent) cautioned that raising the import duty on starch would be disastrous if local production capacity remained inadequate.
Potential cash cow
Under the Government’s tenfold growth strategy that seeks to increase the country’s gross domestic product from $50b (sh185 trillion) to $500b (sh1,850 trillion), cassava is being looked at as a low-hanging fruit that the country can capitalise on for starch that is used as a raw material in pharmaceuticals and confectionaries.
Cassava is a major raw material in the manufacture of starch, ethanol, glucose, sorbitol and monosodium glutamate, among others. It is also used for packaging, paper boards and copper smelting.
Uganda now boasts the largest number of cassava-based industries in East Africa, with four factories in operation. If given priority, experts say, the sector could save the country up to $343.9m (sh1.3 trillion) through import substitution.
