Fresh controversy has erupted over Uganda’s industrialisation policy after it emerged that the government, through the Ministry of Finance, committed to pay import taxes for a Chinese-owned company operating under the Tangshan Mbale Industrial Park—at a time when other manufacturers are struggling to stay afloat without any government support.
The company at the centre of the scandal is Grace Textile International Investment Ltd., commonly known as Grace Foam, which deals in foam and bedding products, including mattresses, blankets, and bedsheets.
According to documents seen by our reporter, the Ministry of Finance wrote to the Uganda Revenue Authority (URA) on 27th September 2023, in a letter referenced TPD167/238/09, committing to pay taxes for the company’s imported “intermediate textile inputs” up to 30th June 2024.
However, a subsequent URA demand notice dated 4th September 2024, signed by Acting Commissioner for Customs Asadu Ksitu, reveals that Grace Foam had accumulated over UGX 17 billion in unpaid import taxes between 1st July and 4th September 2024—just weeks after the government’s tax commitment period had expired.
While the Ministry had committed to meeting these obligations using funds from the national treasury, what remains unclear—and of significant public interest—is whether this money was ever actually paid to URA or if the commitment remains only on paper.
Investigations into whether any payments were made are currently ongoing.
Industry insiders and import monitoring sources allege that Grace Foam has been importing finished products, reportedly already branded and labelled “Made in Uganda,” leaving little to no actual value addition taking place within the country.
“This cannot be called manufacturing,” one industry player told us under the condition of anonymity. “If the products arrive branded, packaged, and ready for the market, what exactly is being manufactured here? How does this qualify for tax relief from the government?”
In stark contrast, a local manufacturer in the same industry continues to pay all tax obligations without any government assistance. This manufacturer reportedly employs over 1,000 Ugandans and contributes an average of UGX 2 billion per month in taxes, amounting to UGX 24 billion annually, while competing in the same market without any exemptions or relief.
Meanwhile, Grace Foam is said to employ fewer than 200 workers, yet it received special government tax payment support that no other players in the sector have been granted.
The issue first came to light in a letter dated 4th March 2024, authored by Kampala Associated Advocates (KAA) and addressed to the Permanent Secretary of the Ministry of Finance. The letter raised legal concerns regarding the nature of the arrangement.
It questioned the legal framework under which Hon. Matia Kasaija’s ministry assumed the tax obligations of a private company, and requested clarification on the criteria used to select Grace Foam for such a substantial benefit.
Although the KAA letter did not directly accuse the Ministry of wrongdoing, it sparked widespread debate within both the business and legal communities.
Citizens and manufacturers alike are now demanding answers: Why was Grace Foam selected for this benefit? Has any measurable value been delivered in return? How much money has been disbursed from the treasury? What agreement, if any, was signed between the government and the investor? And most importantly, has the investor fulfilled their end of the bargain?
What has further frustrated observers is the fact that this same tax commitment was suspended in September 2022 pending broader stakeholder consultations. However, it was quietly reinstated in 2023 with no public explanation or engagement, raising serious concerns about transparency and accountability in the Ministry’s decision-making processes.
Internal ministry correspondence shows letters being forwarded between officials, with handwritten annotations expressing uncertainty and calling for further guidance, suggesting that the matter was not fully resolved even within the government itself.
While the tax commitment appears official, and the URA’s demand notice confirms that imports continued, no evidence has yet emerged proving that the URA received actual payments from the treasury.
This remains a central issue under investigation, with more information expected in the coming days.
One source from within the foam manufacturing sector commented that such arrangements, if unchecked, could distort the market, undermine genuine manufacturers, and turn Uganda’s industrialisation agenda into a cover for high-level import schemes.
“This is not just about one company,” the source said. “It’s about fairness, transparency, and the future of local industry.”
As the Ministry of Finance and the URA continue to maintain silence, public frustration is mounting, particularly among manufacturers who feel abandoned despite their substantial contributions to job creation, taxation, and local value addition.
This story is still developing. Investigations are ongoing to determine whether public funds were indeed disbursed, who authorised the payments, and what legal or policy basis guided these decisions.
