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.
  

