Kampala, Uganda Oct. 22 - Plans by India's Tata Coffee to set up a $20 million instant coffee plant in Uganda have been delayed by the failure to secure up to 100 acres of land for the plant, the executive director of the state-run Uganda Investment Authority said Monday.
The UIA has been trying to secure land for Tata Coffee since last year, but a lack of funds has proved the greatest hindrance to finding a suitable location for the project, Magie Kigozi told Dow Jones Newswires. The lack of funds also means it has been difficult to travel to prospective sites, she said.
However, the UIA is optimistic that by the end of the year it will have secured 100 acres of land in Jinja, around 80 kilometers east of the capital Kampala, Kigozi said. And an official with Tata Coffee Uganda Ltd. said construction work would begin as soon as the company is allocated land.
Kigozi said lack of available land has affected other prospective investments in Uganda, with up to 15,000 hectares of land required for various investments. The UIA is currently in talks with the government to ensure it can secure land for new investors.
"Until the issue of land is addressed, Uganda remains at a competitive disadvantage compared with other locations in East Africa," she said.
Tata Coffee Uganda, a unit of Tata Coffee, said in October last year that it had signed an agreement with the government to set up a $20 million instant coffee plant in Uganda. Construction had been expected to start in January 2007 and take around two years.
Uganda is seeking to end exports of raw coffee beans, which are prone to volatile coffee prices on the world market.
Uganda is Africa's second leading coffee producer after Ethiopia.