Batu to Close Jinja Factory

Source from:  The Monitor (Kampala) December 16, 2005 Tabu Butagira 12/19/2005

BRITISH American Tobacco Uganda (Batu), announced yesterday that it will close its 78-year old cigarette manufacturing plant in Jinja district in March next year and lay off 68 of the 85 factory workers. The retained employees are to be sent to work in Nairobi, Kenya, which under a radical international company re-structuring, now remains the only BAT cigarette manufacturing centre in the entire East African business unit, comprising Uganda, Tanzania, Rwanda, Burundi and Kenya. Internal review Mr Jimmy Kiberu, Batu's Head of Corporate and Regulatory Affairs, told a press conference that the new policies follow prolonged internal review and consultations on ameliorating BAT's business operations from "good to great". He said Uganda has now been named alongside Brazil, India, Indonesia and Zimbabwe as "BAT group's five strategic tobacco leaf sources for its global business". "Uganda's fertile soils and its stable weather patterns give the country immense potential to become a major source of world-class tobacco. Uganda will be the centre of excellence for leaf growing, processing and exports while BAT Kenya's factory will become a centre of manufacturing excellence," Kiberu said. Company Secretary Richard Wejuli-Wabwire and Corporate Social Responsibility Manager, Simon Kaheru both addressed the media briefing. Kiberu said the re-organisation is to streamline activities of BAT and bring them in tandem with the provisions and arrangements of the East African Community. "Batu's tobacco processing plant in Kampala and its four leaf growing centres in west Nile, Middle North, North Kigezi and Bunyoro-Mubende area, remain unaffected," he said. Better option The re-categorisation of business specialisations for the 180 countries in which BAT operates the world-over, are based on the comparative advantage that each enjoys. Daily Monitor has learnt that Batu's Jinja factory has been operating at a-half of its annual two billion-cigarette production capacity. The plant, which consumes just about five percent of the total national crop output, has mainly been manufacturing Safari brand for domestic consumption after the making of Sportsman, Rex and Embassy products were shifted to Nairobi, two years ago. Globally, the group had 81 cigarette factories in 64 countries, which produced 853 billion cigarettes last year but now one of the biggest plants in Southampton, UK has also been shut in the wide-ranging changes. Revenue intact But Kiberu said Batu's decision to terminate cigarette manufacturing would not affect its revenue contribution to the treasury adversely "provided the business environment remains stable" since the company's leaf production has mainly been for the export market. "If illicit trade in cigarettes is controlled, it is anticipated that there will be no reduction in our revenue contribution to the central government," he said. The main hurdle to Batu's domestic sales has always been smuggled Super match cigarette that are sold cheaply on the open market. Illegal cigarettes Last month, the Special Revenue Police Services in a joint swoop with the anti-smuggling enforcement unit of URA, impounded a total of 985 cartons of illegal Kenyan-made Super match stocks in Arua- Democratic Republic of Congo border areas alone, which has an equivalent taxable value of Shs583 million. "Our assumption is that once we pull these (illegal quantities) out of the market, registered tobacco companies like Batu and Leaf Tobacco and Commodity Company will be able to sell an equivalent volume and pay the government the due taxes," SRPS Spokesman Ba-Hoku Barigye said on December 6. Batu mainly exports to the US-based Universal Leaf Company but suffered a devastating loss of $2 million in 2004 when international buyers rejected huge shipments of its burly crop due to adulterated quality. Enditem