Eight Chinese firms have signed memoranda of agreement to start production at the SinoUganda Industrial Park in Mbale district. Two other firms have already started production, its proprietor, Paul Zhang, told a visiting delegation of investors from China on Wednesday.
The investors were led by the country’s former vice-foreign affairs minister, Lu Xinhua. The delegation of 30 investors is on a factfinding tour of Uganda, Kenya and Tanzania, to explore opportunities for investment. Zhang told the delegation during a tour of Tian Tang Mukono Industrial Park in Mbalala, which he also owns, that Uganda has attractive policies for foreign investment, including a 10- year import tax holiday.
Officials at the park, however, say unstable electricity supply affects production, especially in the steel manufacturing section. The $46m facility on the outskirts of Mukono town sits on 75 acres of land and employs 1,500 people, most of them Ugandans. The industrial park consists of three plants producing steel, wood and furniture products, as well as mattresses for both the domestic and export markets.
Zhang said the Sino-Uganda Industrial Park, which was commissioned by President Yoweri Museveni in March, is open for more Chinese firms to set up investments. The two firms that have started operations are Ubon Industrial Co Ltd, which is expected to produce LED lights and Pearlight Technology Ltd, which will produce household appliances, such as cables and detergent powder.
The 619-acre industrial park located in Bukasakya sub-county, targets to attract at least 60 Chinese firms, investments worth $600m (about sh2.2 trillion) and create at least 12,000 jobs for Ugandans. The industrial park is expected to be dominated by industries engaged in agroprocessing, metallurgical building materials, new energy, automobile manufacturing and assembly, as well as household appliances, Zhang explained.
The Mbale park is one of the 22 parks that the country plans to establish by 2020, to boost industrialisation. Lu, the chairperson of the Council for Promoting the South-South Cooperation (CPSSC), lauded Uganda’s investment climate during a business forum in Kampala on Tuesday. CPSSC is an influential organisation set up in 2014, to promote mutual co-operation between China and developing countries in education, culture, politics and technology. Lu said the organisation, with over 100 large state-owned and private enterprises as members, has interests in infrastructure, manufacturing, finance, energy and mining, engineering, healthcare, culture and education.
He served as vice-minister for foreign affairs from 2003 to 2006. He has held several other senior leadership positions in diplomatic service and government. Uganda has witnessed rapid growth in Chinese investment over the past decade, largely driven by good diplomatic ties with the Asian country. Chinese firms have set up investments worth over $1.2b (about sh4.4 trillion) and created more than 45,000 jobs since 2011, according to the Uganda Investment Authority.
For the last six years, China has been one of Uganda’s top two sources of foreign direct investments and second largest trade partner with volumes worth $811m in 2017. Industrial production is one of the eight new areas of co-operation between China and Uganda over the next three years, as agreed during the September Forum on China-Africa Co-operation (FOCAC) in Beijing. Under the arrangement, Chinese companies will be encouraged to increase investment in Africa and build and upgrade economic and trade co-operation zones on the continent.