Tag: Industrialisation

Building Uganda’s Industrial Future: A Case Study of the Kapeeka Industrial Park

Posted on By Nnanda Kizito Sseruwagi

One of the model industrial parks in Uganda is the China-Uganda Liaoshen Industrial Park in Kapeeka, Nakaseke District. About 80 different industrial establishments are spread over 5.2 square kilometres, with each sitting on a minimum of 20 acres. The name of the park is a combination of “Liao,” from Liaoning Province in northeast China and “Shen” from Shenyang, its largest city, where the chairman of the park, Mr. Zhang Hao, comes from. The conceptual planning of the park was made by the China Northern Architectural Design and Research Institute Co., Ltd, and President Museveni laid its foundation stone in 2015.

In its design, it is a fully serviced industrial park with good road and water networks, onsite electricity and a one-stop centre for all business services. It has supporting offices and facilities, including commercial offices, leisure and entertainment areas, and recreational and sporting facilities like football fields and tennis courts.

The industrial park is designed mainly for investments in Agro-processing, building materials, textiles, light industry, assembling of household appliances and logistics and warehousing. Most of these are planned to undertake manufacturing using mainly local raw materials and supply both local and export markets. Where certain raw materials cannot be sourced locally, investors are free to import them to support their manufacturing process.

The idea behind this industrial park, which was conceived in 2013, is to support the economy through value addition. This vision is already being achieved, with textile factories producing quality merchandise exportable to Europe as well as serving the local market. There are also a number of factories that are into food processing, e.g. maize milling and making snacks out of dried fruits.

The government is working to ensure there is a market for the goods produced from the park. It has signed trade agreements with China, COMESA, Europe and other trade blocs. The agreement between Uganda and China is critical since it helps the country to export products from Uganda to China without tax. Such incentives are in place to enable manufacturers to expand and produce more to supply the markets. These are the market opportunities that should be presented to investors to attract them to start businesses in Uganda.

As the country develops its industrial capacity, there is a need for the government to invest more in road infrastructure, extend and ensure reliable power supply to the industries, and build sewage and water facilities. Water is specifically identified as a challenge because Uganda does not have enough capacity to supply to all plants, and sometimes, the electricity also does not meet the industrial needs. Therefore, the government should address the challenge of an unstable power grid.

The managers of the industrial park are keen to ensure that local communities benefit from its opportunities. For instance, most of the local materials are purchased from Ugandans. Most of the people employed are also deliberately recruited from communities near the park. There are also, of course, indirect jobs created in the supply chain, e.g., people providing housing facilities, food, and other utilities.

At the start of the project ten years ago, few Ugandans could manage the technology of the park. However, with time, there has been skills transfer and more people are now taking on skilled work in the industries. More Ugandans are already doing better in the marketing and management field, where they started taking part from the commencement of the park.

With time, more Ugandans will understand the business and also take control of factory activities. The tile maker, Good Will factory, has already trained thousands of Ugandans on how the factory works, and the more Ugandans get skilled, the fewer the number of Chinese instructors. The ultimate goal is to have the factories fully run by locals.

The park’s parent company is Zhang Group, an entity that had existed in Uganda for about 20 years by the time the park was launched. The group brings together four enterprises: Hash Security, Airang Hotels and Restaurants, Smartec Hisense products and Liao – Shen industrial park. It invested over $400 million in the park and created employment for tens of thousands of people.

The story of this (these) industrial park(s) is promising because of several reasons, one of which is the fact that it is modelled after similar and successful parks in China. When China’s growth trajectory was taking off, the government invited foreign companies from Japan, the United States of America and Germany to start factories and equip the local people with skills. After about 10 years, local Chinese were able to run their factories. This is the hope for Uganda, too – achieving skills transfer and domestic ownership of the commanding heights of our economy.

The writer is a senior research fellow at the Development Watch Centre.

Sino-Uganda Mbale Industrial Park: Revolutionising Uganda’s Manufacturing Sector

Posted on By Nnanda Kizito Sseruwagi

Chinese investments have played an inextricable role in Uganda’s emergence as one of East and Central Africa’s major manufacturing hubs. The dividends from the industriousness of Ugandan industries have transformed not just Uganda but also several other countries whose consumer markets depend on Ugandan-manufactured goods, including the DRC and South Sudan, to mention a few. Uganda’s industrial capacity spans several sectors, from electronics to textiles, ceramics to steel, and more – all fuelled by factories and industrial parks set up with the support of Chinese capital and expertise. Not only have these industries created jobs, especially for Uganda’s bulging youth demographic, but they have also reduced the country’s import dependency and fostered economic growth. The country now boasts over 50,000 factories employing more than 1.4 million Ugandans, with tens of thousands of workers in Chinese-founded industries, such as Liao Shen and the Sino-Uganda Mbale industrial park.

Uganda’s manufacturing revolution is closely linked to the launch of the Belt and Road Initiative (BRI) by President Xi Jinping in 2013, because BRI is aligned towards enhancing global trade and infrastructure. What spells BRI in Uganda is practically the sprouting of hundreds of standalone factories and many industrial parks spread across different regions of the country. The success harvested from this has been the expansion of the contribution of the manufacturing sector to our GDP from 6.7% in 2000 to 16.5% by 2024, as per UBOS. The broader industrial sector contributes even more, 27.4%. About 40,000 Ugandans are directly employed in diverse Chinese enterprises, playing an instrumental role in the country’s economic growth.

ENGO Holdings Limited and SIMI Technologies were the first electronics manufacturing plants in Uganda, launched in 2019 in Namanve Industrial Park. The firms behind this factory are ENGO Holdings Limited and SIMI, both spearheaded by Chinese investors. Among the products produced there include mobile phones (feature phones and smartphones), laptops, tablets, chargers, USB cables, earphones, etc. These plants can manufacture about 2,000 feature phones, 1,500 smartphones, and 800 laptops daily, among other products. Although currently these plants have to import some Chinese components, the long-term goal is to have full-scale commercial production employing trained local workers. With time, Uganda shall drastically reduce its reliance on imported electronics by producing enough to meet local demands, including the production of a million computers annually.

One of the leading factories manufacturing plastic products and packaging materials for beverages, processed goods, medicines, oils and pesticides is Heng Shang Plastics (Bugolobi, Kampala). Previously, many of these goods were obtained from China. However, today we have import substitution and reliable local supply chains because the factory is local.

Employment that transforms lives

Over 500 workers are employed in Unisteel Investment Uganda Limited, a Chinese-backed steel production industry established with a $100 million investment in 2024. For a developing country like Uganda, steel plays a critical role as the cornerstone of industry and construction sectors. From its use in manufacturing machinery to providing structural frameworks for infrastructure, it is easy to see the significance of Unisteel’s investment.

Sino-Uganda Mbale Industrial Park is the first national industrial park constructed overseas by Hebei province with the approval of the local government, which is of great significance to the BRI. Hosting over 40 companies producing smartphones, televisions, textiles, and steel, and employing around 10,000 workers daily, the park is one of 22 state-level industrial parks in Uganda, which were proposed by President Museveni and China’s Foreign Minister Wang Yi, and constructed by the Tian Tang Group. Mbale City was a very strategic location for this industrial park. It is Uganda’s third largest city, home to millions of people who provide labour and markets, and is also an extremely important border city. Its location also has the advantages of a well-developed transport network and complete infrastructure. Goods from the factories here can be distributed easily to countries of East Africa, North and South Africa, the Middle East and West Asia.

Economic Contributions

Guangzhou Dongsong Energy Company (Uganda) Ltd. is a subsidiary of the Guangzhou Dongsong Energy Group, headquartered in China. The company sits on 1,600 acres of land that is part of the China-Uganda Free Zone at Sukulu. It started operation in October 2018 following a US$62million investment in a bio-organic fertiliser plant, a steel and glass manufacturing plant, a brick baking plant, a steel plant and other related agricultural products. The Guangzhou Dongsong Energy Company (Uganda) Ltd has a 21-year mining lease extendable for 15 years to develop the Uganda-China Free Zone at Sukulu Hills into an industrial complex. Currently, the Chinese-based company is the first to introduce purely organic fertilisers on the Ugandan market, with production standing at over 300,000 metric tonnes per annum. It also produces Sukulu Concrete blocks for construction, with plans to add Sukulu Metal and Sukulu Glass. The company hopes to reduce the Uganda’s expenditure on imports of the industrial sector, which stands at US$377million, US$60 million for fertiliser and US$23 million for glass annually, respectively.

There has been a significant contribution of Chinese investors to the development of Uganda’s industrial capacity. Capital from China has laid a solid foundation for the country to become a manufacturing hub in East and Central Africa. The road to industrialisation and economic self-reliance is now paved. It is up to us to start the journey.

The writer is a senior research fellow at the Development Watch Centre.

 

 

Chinese perspectives on Africa’s late industrialization

Posted on By Nnanda Kizito Sseruwagi

Africa and China’s cooperation recedes hundreds of centuries back. Over 600 years ago, East Africa was one of the areas that cross-pollinated with Chinese civilization through interactions with the voyages of Zheng He, one of China’s greatest navigators. Zheng’s navigations to Africa manifested the Chinese traditional philosophy of harmony, a notion that still resonates in Africa-China relations today. I started with a cursory narration of Zheng He’s trips to Africa to lay out a historical context of these two ancient civilizations’ partnership in view of discussing the delayed industrialization in Africa, yet inspired by the quick modernization in China.

We are now in the first quarter of the 21st century – an age increasingly taken over by the fourth industrial revolution, and Africa remains largely a raw material production instead of an industrial production continent. Whereas we make up 18% of the global population, we contribute less than 3% to the global Gross Domestic Product (GDP).

I don’t intend to sound blameful of Africans and African leaders for Africa’s current development burdens as is commonly done by those who reason by analogy. But I cannot escape describing the depressing political anatomy of Africa currently. I believe that Africa is not on its own path to development, since all factors determinant of this have been overshadowed by Western hegemony. In an attempt to walk in the footsteps of Western countries by mimicking their current governance standards, Africa seems to have failed to “catch up” yet the material crisis at hand is that we are still trying to heal from the past, not to catch up with the future.

Chinese perspectives on Africa’s industrial development are key because of the comparative analysis they offer. China has recently trodden the path that Africa is on. Whereas China greatly learnt or reverse-engineered industrial processes from the West, the Chinese retained control over the vision and character of where their country was headed. As for Africa, the elite-capture by Western ideological persuasion and hegemonic institutions like the IMF and World Bank still obtains. Even when Africans genuinely intend to design policies that respond to domestic realities, they are still fraught with Western epistemic prejudices.

The first step to realising our industrial transformation is taking cognizance of who we are and where we want to go. The Chinese are so sure of who they are and where they are headed. They never blink off their course. As for Africans, our social, economic and political agendas remain dictated from Europe or North America. Whereas these agendas were violently determined during colonialism, the legacy of it is that we sincerely believe them and serve their realisation almost willingly today. The average African elite suffers a Stockholm syndrome which makes him/her a subconscious missionary of Western views about Africa which constrains our agency in mapping our development path. We need to decouple from this mental capture in how we view ourselves and our governments if we are to start domestically industrializing our economies. If an African entrepreneur like Joseph Magandaazi Yiga (Jomayi) is struggling, we need to help them save their businesses even if they individually get punished for their legal liabilities. We shouldn’t think of successful African business people like Hamis Kiggundu as fraudsters. This is purely a colonial-victim mindset.

In just 25 years, China sat on the drawing board and designed and executed a policy that saw it become an industrial powerhouse. Had they viewed themselves through Western lenses, all knowledge would guide them on a path that seeks industrialization across a period of not less than a century.  Africa should forget industrialization if all our central banks and ministries of finance remain controlled by Bretton Woods knowledge. We rather should sit on the drawing board as China did, and fix our troubles ourselves.

This does not mean that things will work in Africa as they worked in China. But it guarantees that for the first time, things will work out on our terms and we shall dictate our path to development.

We must also exploit the market we have of 1.4 billion people. Whereas we lack a price-competitive manufacturing labour-force, we can build momentum for a skilled work-force by internally trading and consuming each other’s goods. Research by the Harvard Business Review reveals that the share of intra-African exports as a percentage of total African exports is 17%, which is far below the 69% recorded for Europe and 59% for Asia. We cannot advance if we never trade with each other because we are still in the nascent stages of industrialization to capably compete at the global market.

Poor infrastructure in Africa must urgently be improved to reduce the cost of trade. Fluency in market logistics is the path along which industrialization happens. Africa should develop its seaports, roads, airports and railway lines to enable commerce. If it remains more expensive to trade with each other because of the disastrous infrastructure on the continent, we shall remain consumer colonies of other continents’ exports. We should maximumly exploit the Belt and Road Initiative to develop our infrastructure.

One factor has been constant in Africa’s underdevelopment – Western interference. There has been an adverse failure of Western development prescriptions for Africa. I don’t understand why we continue to follow such prescriptions to no avail. Western aid and its attendant ideological hegemony continue to promote economic and policy dependence in Africa. If we never seize control of our economies and have autonomy in thinking and designing policies for our continent, how shall we control our future? In whose hands shall Africa’s destiny lie?

The author is a senior research fellow at the Development Watch Centre.

nnandakizito@dwcug.org