Uganda: Nile Breweries warns of possible drop in tax contributions

Nile Breweries Limited-Uganda says its contribution to the national tax purse could fall significantly as the coronavirus lockdown disrupts alcohol transportation and sales. The company paid 394 billion shillings in taxes in the 2018/19 financial year, one of the highest amounts paid by a single company, the Independent reported on April 26.

Onapito Ekomoloit, the NBL Legal and Corporate Affairs Director, said the company is producing below 50 per cent since the time of the lockdown. The production reduced from the time the government took a decision to close bars, borders with neighbouring countries, and banned on parties, as one of the first enforcement measures to stop the spread of COVID-19.

But despite the measures, factories like NBL were still allowed to produce. However, Onapito says that they are having trouble selling what is produced as law enforcers tell their transporters that beer is not essential and their trucks shouldn’t be moving. This has seen a significant fall in beer sales which will consequently dent tax contribution.

Onapito says that their factories both in Mbarara and Jinja are open, with critical staff encamped at the factory. Most workers are at home using this time to take their annual leave, Onapito says. But to run at full capacity, they needed to deliver alcohol to people’s homes.

“It is contradictory if you produce but then you cannot transport. You will end up with more alcohol than you can store,” he said.

With the lockdown, the 2019/20 financial year tax collections are expected to generate a huge shortfall as much of the second half of the year has been disrupted by COVID-19.

NBL also deals with farmers that supply it with barley and sorghum. Low production means less is bought from farmers. The company, with 59 per cent of the alcohol market in the country, buys an average of 18,000 tonnes of barley and 10,000 tonnes of sorghum from farmers annually.

Last year, it paid 40 billion shillings to farmers, according to the company reporting. Onapito says their staff in the field are still able to reach farmers for guidance on production.

NBL on average produces 179,353 hl of beer from its plants in Jinja and Mbarara. A hectolitre is equivalent to 100 litres. It produces brands like Nile Special, Club Pilsner, Eagle Dark, Eagle Extra, Eagle larger and Castle Lite.