Tanzanian coffee player Karagwe Estate Limited settles contract breach wrangle, makes a comeback

TANZANIA – Karagwe Estate Limited, one of the top players in the Tanzanian coffee sector, has got back to its feet to undertake its business as normal after the company’s management came into understanding with Touton SA over an alleged breach of contract on the supply of several metric tons of coffee.

The dispute between the parties arose with respect to US$2m in pre-financing and no-delivery of contracted coffee in repayment.

The dispute was referred to arbitration by Touton AS, Claimant, and registered by the British Coffee Association on September 13, 2019, against Karagwe Estate Limited, the Respondent.

The London-based Commercial Dispute Resolution Tribunal issued an Award in favor of Touton SA, requiring Karagwe Estate Limited to pay US$0.6m and £4,822.27 (US$5707) .

Touton SA, thereafter, filed an application before the Tanzanian Court for registration of the Award in question. Judge Patricia Fikirini granted the application, a result of which made the Ward form part of the court decree dated July 28, 2020.

It was then that the court ordered the judgment debtors to satisfy the decree in question by paying Touton SA the decretal amount.

Karagwe Estate finance manager Mr. Justin Kamafa said after settling their legal issues, the company has made a comeback, and is emerging as one of the top coffee buyers in the Kagera region.

“The legal issues were mainly because of the government’s move to stop private trading and initiate auctions, as well as the Covid-19 pandemic that impacted businesses and economies worldwide,” said Mr. Kamafa in an exclusive interview with The Citizen, in Tanzania.

“So, it was never our intention. Now we have made a comeback, and from an estimated 50, 000 metric tonnes of coffee that were put up for auction in the 2022/2023 season, we have traded near 15, 000 metric tonnes, close to 35 percent of the total volume.”

Responding to auctioning system enforced by the Tanzanian government, he noted that the process has reduced costs and ensured the trustworthiness of the business.

In addition, it has improved the auction price cap of coffee from the previous Sh1,600 a kilo to Sh2,030.

“There is a lot of benefit to farmers as a result of this system. The market demand is also fast and improving,” Mr. Kamafa underscored.

According to the Tanzania Coffee Industry Development Strategy 2021, the auction system is believed to have multiple advantages, including better prices for the value chain as well as better control over exports.

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