Monday, June 29, 2009

Burundi seeks private investors for coffee sector

Reuters, Monday June 29 2009

Burundi is seeking investors to make the coffee industry, the central African nation's top hard currency earner, more productive and competitive, officials said on Monday.

Coffee employs some 800,000 smallholder farmers in a country of 8 million people that is emerging from more than a decade of conflict.

"We want to implement a series of reforms undertaken over the past 10 years in order to boost the coffee sector," Martin Nivyabandi, minister in charge of privatisation and good governance, told Reuters.

"The government has committed to complete the liberalisation of the coffee sector within the next six months. That is why we have put in place affordable financial conditions to attract a big number of investors."

The government said the coffee industry is losing some $2 million in revenues every year due to factors such old processing machinery and the age of its coffee trees.

Burundi earned $58.9 million from a crop of 24,015 tonnes in the year to the end of March, a big jump from 8,000 tonnes in the 2007/08 crop year. However, it fears output could fall 55 percent in 2009/10 due to the cyclical nature of harvests.

FAVOURABLE TARIFFS

Nivyabandi said investors would benefit from the East African Community's customs union, which Burundi joins in July.

Under the country's new tariffs, capital machinery and its spare parts will not be taxed, while duty on raw materials will be zero-rated, compared with 5 percent now.

"We think once the coffee industry is in hands of the private sector, the coffee processing machinery will be updated and quality will improve," said Nivyabandi.

"Private industry will work directly with coffee farmers and show them the quality of coffee they want," he said.

Burundi's coffee trees were introduced under Belgian colonial rule in the 1930s. The government plans to plant 30 million young trees in the next four years.

The Burundi authorities want investors to inject capital into the country's 133 coffee pulping stations, five coffee managing companies and two coffee milling stations.

Earlier this month, the government launched an international tender for the sale of the 133 washing stations. Private investors will hold 75 percent of the shares and the remaining 25 percent will go to coffee producers.

Officials say domestic or international investors must have five years experience as traders, roasters or dealers and prove they have earned at least $1 million in a three-year period.