Nearly two decades after the Government of Uganda privatised Kinyara Sugar Works Ltd — now Kinyara Sugar Ltd — hundreds of sugarcane out-growers in Masindi are still chasing a promise: a 10% stake in the company they helped rebuild with their sweat, land, and loyalty. Instead of share certificates, dividends, or boardroom access, they were handed silence — while their stake was quietly sold off to politically connected entities under opaque circumstances.
Today, that missing stake — amounting to 3,827,113 ordinary shares, now valued at over UGX 34.4 billion(approximately USD 9 million) — is the subject of a landmark legal battle that cuts to the heart of Uganda’s privatisation legacy.
At the centre of Civil Suit No. 327 of 2025, 155 out-growers, led by Uzzi Anthony, Kaahwa Solomon, Bahemuka Swaleh, and Hajji Kazimbiraine Mahmoud, are suing the Attorney General, Kinyara Sugar Ltd, Vectrum Uganda Ltd, and Rai Holdings Ltd. Their allegations are explosive: fraud, breach of trust, unlawful deprivation of property, and systemic exclusion from a company they were not only promised a stake in, but actively helped to sustain and grow.
What began as a celebrated case of inclusive capitalism has now morphed into a cautionary tale of state betrayal, corporate capture, and the invisible costs of Uganda’s privatisation playbook. And for the farmers of Masindi, it is not just about shares. It is about justice.
A Promise Etched in Policy, Broken in Practice
During the divestiture of Kinyara Sugar Works Ltd in the early 2000s, the Government of Uganda worked through UK-based management consultancy Booker Tate Ltd to revamp the factory and prepare it for privatisation. In mobilising farmers to grow sugarcane, the government promised them ownership: 10% of the company’s shares would be reserved for out-growers.
This was not an informal promise. In the 2006 Share Sale and Purchase Agreement (SPA) signed between the Government of Uganda and Rai Holdings Ltd, the sale of 51 per cent of Kinyara’s shares was approved on the explicit condition that the remaining 49 per cent would be allocated in a structured and inclusive manner. According to the agreement, 10 per cent of the shares were to be given to the sugarcane out-growers, another 10 per cent allocated to the employees of Kinyara Sugar Ltd, a further 10 per cent reserved for the Bunyoro Kitara Kingdom, and the remaining 19 per cent was to be listed on the Uganda Securities Exchange for public trading.
To operationalise this, farmers formed a company—Kinyara Sugarcane Growers (2001) Ltd—and agreed to deduct 10% from their payments for every sugarcane delivery made to the factory. These deductions were to go toward purchasing their equity.
In a letter dated December 20, 2004, David J. Arnott, then Finance Manager of Kinyara Sugar Works, wrote to the chairperson of the growers’ association confirming the board’s decision to withhold the final 10% payment to farmers for cane delivered. This money would instead be used to purchase shares for the farmers in the privatisation process.
“The final payment of 10% shall instead be used in the share acquisition of the out-growers in the Mill,” Arnott wrote, adding that this was in line with the company’s strategic and financial plan.
The farmers believed this was the beginning of their journey as shareholders. As stated in the plaint: “The 2nd Defendant (Kinyara Sugar Ltd) deducted 10% on every payment made to the Plaintiffs for sugarcanes supplied to its factory as payment for the farmers’ shares ownership scheme.”
The Disappearance of the Farmers’ Stake
Instead, what followed was a series of decisions made in closed-door meetings, veiled correspondence, and valuation reports that quietly erased the farmers’ entitlement.
According to internal minutes of the 387th meeting of the Divestiture and Reform Implementation Committee (DRIC) held on May 11, 2017, the government opted to sell the remaining 30% of its shares in Kinyara Sugar Ltd to Rai Holdings Ltd—10% of which had originally been earmarked for out-growers.
The minutes note that: “Government-owned 100% of Kinyara Sugar Works Limited… of which 51% were sold to Rai Holdings Limited… 10% were to be offered to the Kingdom of Bunyoro-Kitara, 10% to the Employees of KSL, 10% to the KSL Out-growers and 19% was to be listed on the stock exchange at a future date.”
The key participants in this meeting included Hon. Matia Kasaija, who chaired the session in his capacity as Minister of Finance and Chairperson of the Divestiture and Reform Implementation Committee (DRIC). Also present was Patrick Bitature, serving as an Eminent Member of the committee, alongside Emely Kugonza, the then-Chairman of the Uganda Investment Authority. Representing the Attorney General was Christopher Gashirabake, while the Privatization Unitwas represented by Moses Mwase, its Director, and Jim Mugunga, the Senior Public Relations Officer. Additionally, Deloitte Uganda, the audit and advisory firm contracted to conduct the valuation of Kinyara Sugar Ltd, participated in the proceedings.
The minutes show that a valuation had been commissioned from Deloitte, which estimated the full value of Kinyara Sugar Ltd at UGX 310 billion, valuing the farmers’ 10% stake — equating to 3,827,113 ordinary shares out of a total 38,271,130 shares — at UGX 31 billion.
A Deepening Scandal: What the DRIC Minutes Reveal About the Exclusion of Farmers
The minutes of the 387th meeting of the Divestiture and Reform Implementation Committee (DRIC), held on May 11, 2017, are not only revealing — they are damning. On the surface, they document routine procedural decisions in Uganda’s privatization journey. But beneath the administrative tone lies a troubling narrative of institutional neglect, elitist bias, and a disregard for the very communities government policy had once vowed to empower.
According to the minutes, DRIC resolved that the remaining 30% shareholding in Kinyara Sugar Ltd, previously allocated for farmers, workers, and the Bunyoro Kingdom, would instead be offered directly to Rai Holdings Ltd under a “private treaty” arrangement. Yet what is most alarming is the language and logic used to justify the farmers’ exclusion — and the silence around any meaningful consultation with them.
There is no record in the minutes that the farmers were ever consulted, informed, or even considered as stakeholders in the final deliberations. The committee members, all seated in Kampala offices, decided on behalf of rural farmers in Masindi, despite acknowledging the original SPA that had clearly allocated 10% ownership to the out-growers.
This violates not only the principle of stakeholder participation — a core tenet of equitable privatization — but also natural justice, where those affected by a decision should be given the opportunity to be heard.
One of the most troubling lines in the minutes reads: “Based on experience with previous privatisation transactions, the decision to allocate shares to the Kingdom, Employees, and Out-growers was largely an altruistic cause.”
This statement reduces what was once a formal and contractual commitment into a charitable gesture — and one that the government could arbitrarily withdraw. The committee’s assumption that farmers “did not have the resources to purchase the shares” not only ignores the millions of shillings already deducted from their cane payments, but also presumes incapacity without inquiry.
This is especially outrageous in light of the fact that the Bunyoro Kingdom received its 10% stake and Kinyara workers were later compensated. Why were farmers — the backbone of the entire production value chain — denied the same treatment?
The DRIC minutes also reflect a gross contradiction between Uganda’s privatisation principles, which emphasise broad-based citizen ownership, and the actions taken in this case. By reallocating shares meant for thousands of rural farmers to a foreign-linked private company (Vectrum), the government effectively violated the spirit — and possibly the letter — of its own divestiture policy.
The decision reinforced economic exclusion and deepened structural inequality. It transferred a community’s promised stake in a productive national asset to unidentified offshore interests, under the guise of administrative convenience.
By calling the farmer allocation an act of “altruism,” DRIC essentially shifted the narrative from a right to a favour. This semantic manoeuvre allowed the state to renege on a formal agreement with impunity. It is especially unjust considering that the SPA of 2006 clearly allocated the 10% to out-growers and that Kinyara Sugar Ltd had already confirmed, in writing, the intention to apply the final 10% payment as a share purchase on their behalf.
In doing so, the committee effectively rewrote a contractual obligation — one that farmers had already financially contributed toward — and substituted it with an elitist assumption of unworthiness.
A Procedural Breach: Deloitte Appointed Outside Legal Framework
One of the most glaring procedural violations reflected in the DRIC minutes is the appointment of Deloitte Uganda as the valuer of Kinyara Sugar Ltd without involving the Chief Government Valuer, as required under Ugandan law and the Public Enterprises Reform and Divestiture (PERD) guidelines.
Under the standard privatization framework, the Chief Government Valuer must either conduct or supervise the valuation of public assets prior to any sale. This legal safeguard exists precisely to ensure transparency, impartiality, and public accountability — especially when high-value strategic assets like Kinyara Sugar Ltd are involved.
However, the DRIC minutes show that Deloitte was hired directly by the Privatization Unit, under the Ministry of Finance, to carry out the valuation that informed the sale of the remaining 30% of shares.
Nowhere in the minutes is there mention of oversight, approval, or involvement of the Chief Government Valuer. This omission not only breached procedure — it also raises conflict of interest concerns and undermines the credibility of the valuation itself.
Given that Deloitte’s valuation underpinned the final sale price offered to Rai Holdings (or later Vectrum), this irregularity has far-reaching implications. As the plaintiffs allege in the suit:
“The Defendants conspired to illegally procure the audit firm Deloitte without any advert to undervalue the farmers’ shares…”
This claim is not baseless. The entire privatization process hinges on how assets are valued — and if the valuer is handpicked, with no competitive bidding or statutory oversight, the entire transaction risks being rendered legally and ethically questionable.
The Consequence of Bypassing Oversight
The exclusion of the Chief Government Valuer enabled what the farmers believe was a deliberate undervaluation of their 10% stake. Based on the Deloitte report, the total valuation of Kinyara was pegged at UGX 310 billion, translating to UGX 31 billion for the farmers’ 10% stake. But without a second, independent valuation — or proper procurement — it is impossible to verify if this figure was fair or manipulated to suit pre-determined outcomes.
Letters to My Younger Self: Robinah Siima — “Success Is Quieter, But Richer”This procedural lapse also played a direct role in denying the farmers an opportunity to negotiate or buy the shares. As long as the valuation remained internally managed, the process lacked the transparency required to determine whether the farmers could have raised the necessary funds — or whether they were shut out by design.
The Vectrum Mystery
One of the most controversial and opaque elements in the Kinyara Sugar privatization saga is the emergence of Vectrum Uganda Ltd — a company that, until recently, had remained virtually unknown in public records. Despite the clear resolution of the 387th DRIC meeting that shares be offered to Rai Holdings Ltd, it is Vectrum that ultimately ended up owning 7,654,226 ordinary shares, equivalent to 30% of Kinyara Sugar Ltd — including the disputed 10% shareholding originally meant for the farmers.
This sudden and unexplained shift is at the heart of what the plaintiffs describe as a deliberate and calculated fraud.
According to the plaint: “The Plaintiffs were surprised to discover that the Defendants had secretly transferred 7,654,226 ordinary shares to Vectrum Overseas Holdings Limited… which included the 10% disputed shares belonging to the farmers.”
Even more troubling is the fact that Vectrum Uganda Ltd is linked to the British Virgin Islands, a jurisdiction known for financial secrecy and anonymous company registration. As of the time of the transfer, there was no public disclosureabout who owned Vectrum, what its relationship was with Rai Holdings, or how it qualified to acquire shares in one of Uganda’s strategic agro-industrial assets.
This lack of transparency is not a procedural oversight — it is a governance red flag.
If the government’s intention, as repeatedly stated in the DRIC minutes, was to reward Rai Holdings Ltd for its initial 51% investment in Kinyara, then the question arises:
Why was the stake transferred to Vectrum instead? What did Vectrum do to deserve it?
No evidence has been presented that Vectrum made any investment, provided any technical support, or held any existing relationship with the Government of Uganda or Kinyara Sugar Ltd. There was no mention of Vectrum in the Share Sale and Purchase Agreement (SPA), no reference in the DRIC resolutions, and no competitive process to justify its involvement.
In the absence of answers, several troubling possibilities emerge:
Was Vectrum acting as a proxy for politically connected individuals?
Was it used to shield beneficiaries of the share allocation from public scrutiny?
Did it provide a legal smokescreen to transfer shares meant for public and community ownership into private hands?
These are not speculative questions — they go to the heart of public accountability, asset recovery, and economic justice.
In their suit, the farmers not only demand the cancellation of this share transfer but also challenge the legitimacy of Vectrum’s ownership altogether. They are calling for the court to declare the transaction null and void on grounds of fraud, breach of trust, and unconstitutional deprivation of property.
The mystery of Vectrum is more than a side note in this story. It may turn out to be the linchpin of the entire scheme — a shell through which promises to thousands were broken, laws were bent, and state assets were quietly siphoned into obscurity.
Until the veil is lifted, the 30% now held by Vectrum will remain the most powerful symbol of what went wrong with Uganda’s privatization experiment.
Search for Justice: The Farmers Strike Back
After years of silence, confusion, and what they call calculated exclusion, the sugarcane outgrowers of Masindi have turned to the courts in a bid to reclaim what they say was unjustly taken from them. In Civil Suit No. 327 of 2025, filed at the Commercial Division of the High Court in Kampala, 155 farmers are demanding legal redress over the fraudulent deprivation of their 10% shareholding in Kinyara Sugar Ltd.
The plaintiffs — including Uzzi Anthony, Kaahwa Solomon, Bahemuka Swaleh, and Hajji Kazimbiraine Mahmoud— accuse the Attorney General (1st Defendant), Kinyara Sugar Ltd (2nd Defendant), Vectrum Uganda Ltd (3rd Defendant), and Rai Holdings Ltd (4th Defendant) of orchestrating a scheme that denied them their rightful stake in the company.
In their plaint, the farmers state that “the 2nd Defendant deducted 10% on every payment made to the Plaintiffs for sugarcanes supplied to its factory as payment for the farmers’ shares ownership scheme.” They allege that these deductions were made under the authority and agreement of both Kinyara and the government, specifically to enable their acquisition of the 10% stake reserved for outgrowers under the 2006 Share Sale and Purchase Agreement (SPA).
However, as they later discovered, their promised shares had not only failed to materialize, but were secretly transferred to a third party — Vectrum Uganda Ltd — without their knowledge, participation, or compensation.
“The Plaintiffs were surprised to discover that the Defendants had secretly transferred 7,654,226 ordinary shares to Vectrum Overseas Holdings Limited… which included the 10% disputed shares belonging to the farmers,” the plaint reads.
The farmers further contend that “the 1st and 2nd Defendants became trustees for the farmers’ shares which trust they breached by selling and transferring the said shares to the 4th Defendant (Vectrum) without their consent and without compensation.” This, they argue, constituted a fraudulent breach of trust and an abuse of power.
They accuse the defendants of unjust enrichment, having retained the 10% deductions and then denied the farmers any shareholding or dividends. They also challenge the legality of hiring Deloitte to conduct the valuation, stating:
“The Defendants conspired to illegally procure the audit firm Deloitte without any advert to undervalue the farmers’ shares.”
In what they describe as a violation of their constitutional rights, the farmers argue that the government and its agents “deprived them of their property… without adequate and fair compensation contrary to Article 26 of the Constitution of the Republic of Uganda.”
As part of their relief, the plaintiffs are seeking a declaration that they are the rightful owners of 3,827,113 ordinary shares, constituting 10% of Kinyara Sugar Ltd. They are also asking the court to order the cancellation of the share transfer to Vectrum Uganda Ltd, which they claim was done fraudulently and without their consent. In addition, the farmers are demanding the restitution of the shares or, alternatively, compensation equivalent to their current market value.
They further seek a refund of the 10% deductions that were made from their sugarcane payments under the pretext of acquiring shares. To this, they add claims for general damages, aggravated damages, and punitive damages to account for the harm and distress suffered as a result of the defendant’s actions. The plaintiffs are also requesting the court to award them interest at the rate of 25% per annum from the date of the breach until the full amount is paid. Lastly, they are seeking a permanent injunction to restrain the defendants from making any further transactions or dealings involving the disputed shares.
In their view, this is not merely a commercial disagreement — it is a fight for justice, dignity, and recognition.
Their legal team, composed of Kaggwa & Kaggwa Advocates, Meritas Advocates, and Neptune Advocates, argue that this is not just a commercial dispute but a landmark constitutional case.
Kinyara’s Business Today
Kinyara Sugar Ltd is one of Uganda’s top three sugar producers, generating an estimated UGX 360 billion in annual revenues from over 120,000 metric tonnes of sugar output. Since Rai Holdings acquired control, the company has expanded operations, invested in cogeneration, and diversified into ethanol production.
But the outgrowers say they have seen no benefit. No shares. No dividends. Not even a meeting.
What Happens Next?
This case could reshape public policy on privatisation, force transparency in Uganda’s divestiture history, and set a precedent for similar cases across the country. It calls into question the role of the Privatization Unit, the accountability of the DRIC, and the legality of public asset transfers to private entities.
Whether the court will uphold the farmers’ claims or side with powerful state and business actors remains to be seen. But one thing is clear: the farmers are not backing down.
