East African Business Week (Kampala)
24 June 2009
Bujumbura — The Burundi government has launched a comprehensive programme to privatize its coffee sector, the country's biggest export and employer, according to a report.
Through a World Bank project called Economic Management Support Project (PAGE), the government recently said it was divesting all its interests in the entire coffee sector, according to a report seen by the East African Business Week.
Up for grabs are 117 coffee washing stations and two dry mills.
The coffee washing stations have been grouped into 29 categories of three to six manageable and profitable neighbouring units. Each of these groups had an average production of 3,100 tonnes of coffee cherries in the period 2004 to 2008.
Burundi is reputed to have some of the best coffee in the world.
The country grows Arabica coffee on its mountainous volcanic soil slopes. The sector engages 85% of the country's population, mainly in the rural areas.
The objectives of this process are to increase the revenues of the coffee producers by increasing the competitiveness of the washing stations, bettering the valorization of the coffee cherry and having the producers part-own the industry. Another objective is to increase the competitiveness in the coffee sector by identifying the structures and assets which have a viable profitability even in the current adverse international conditions of the Arabica coffee market.
This competitiveness will be enabled by a transparent privatization process which will enable healthy competition.
This privatization is also meant to optimize the value of state assets by structuring the assets sale process so that it is attractive to strategic investors.
Part of the process will include the creation of a Coffee Industry Regulatory Framework which will include a state regulator and a coffee industry association. These institutions will replace the coffee body OCIBU which currently performs both functions.
The state regulatory authority will be created by presidential decree and the association will be formed and registered by industry stakeholders. The process will be unfolding in the next 10-12 months.
Apart from coffee, the government also plans to privatise its hotels, telecoms, sugar sector, banks and energy. PAGE chief, Mr. Seleus Nezerwe told East African Business Week recently that the exercise would be advertised and bidded for according to laid down procedure of the government's divestiture programme outlined by the World Bank.
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