By David Rupiny
The business success story of Nile Group of Companies, with a portfolio of 30 big subsidiaries, is inspirational as it is aspirational.
In 1996, a then relatively younger Magan Patel, now the senior, visited Uganda and fell in love, at first sight. According to Patel, he saw lots of business and investment opportunities yet he lacked the wherewithal to snap up any.
He decided to go back to India where he spent four years mobilizing startup capital. He also reached out to many people with propositions of creating joint ventures.
In 2000, Patel, returned to Uganda and set up a trading company dealing in soap, cooking oil, wheat flour and other household items.
As he traded, Patel says he noticed that Uganda has huge agricultural resources and investor-friendly policies. This motivated him to venture into agro-processing, hence Nile Agro Ltd. was born.
Leveraging his business acumen and exploiting Uganda’s conducive business and investment climate, Patel slowly but surely started to grow his business and investment portfolio.
Eventually, a number of industries that substituted imports started to emerge under the ambit of Nile Group of Companies, owned by Patel and like-minded business partners.
According to Nile Group’s Chief Executive Officer, Jay Patel Jr, their business empire now has 30 subsidiaries and is one of the top employers and taxpayers in the country.
Some of the key investments, in addition to a string of trading companies, are Nile Agro Ltd., Nile Aluminum Ltd., Nile Batteries Ltd., Nile Wheat Ltd., Nile AgriChem Ltd., Auro Meera Paper Ltd., Modern Distillers Ltd., Modern Laminates Ltd., Nile GM Plastics Ltd., and Modern Rubber and Cable Ltd. and an associated recycling plant.
Others are Mayuge Sugar Ltd., Kamuli Sugar Ltd., G. M. Sugar Ltd., Modern Allied and Footwear Ltd., MMP Steel & Allied Industries, Modern Heavy Engineering Ltd., H. K. Industries Ltd., Bushenyi Cotton Ltd., C. N. Cotton Ltd., Lukonge Ginnery Ltd., Modern Textiles Ltd., and Nile Transformers Ltd.
Francis Baganze, the Director for Corporate Affairs, says the group employs 12,000 Ugandans directly, and 50,000 indirectly.
Target is import substitution
These industries are all structured and poised to substitute imports, hence contributing to reservation of foreign exchange.
Speaking at the ceremony, Patel Jr said they are on a mission to reverse the state of Uganda as a net importer of many items it actually has competitive advantage in, citing paper products, textiles, agro products, leather products and pharmaceuticals as examples.
To illustrate his point, Patel Jr said since Uganda has good quality cotton, they, for example, through subsidiary Modern Textiles Ltd., have deliberately invested in 10 ginneries and are now producing materials for school uniforms and other uses at 50 percent of the market cost.
In the paper sector, Patel Jr said through their Auro Meera Paper factory they aim to transform Uganda from a net importer of paper products to a net exporter to the region and world. He said they will reduce prices of books by 50 percent. Likewise, on footwear, Patel said their factory will also produce various types of shoes at 50 percent of the current costs.
Heeding Government’s clarion call
Responding to the Government policy of promoting the development of private industrial parks, Nile Group mooted the idea of establishing an industrial zone that concentrates most, if not all of their industries, in order to collectively enjoy synergies and economies of scale.
The group acquired1,000 acres of land to set up MMP Industrial Park, one of the biggest private industrial parks in Uganda.
The park is located in Buwampa in Buikwe District, nestled between the industrial areas of Mukono and Jinja. The land is strategically touches on the Mukono-Katosi-Jinja highway and Lake Victoria, as well being in close proximity with the Uganda-Kenya railway line.
In addition to the 12,000 Ugandans the group directly employs, MMP Industrial Park will employ 15,000 Ugandans directly, and over 100,000 indirectly.
A fundamental move
To signify Nile Group’s seriousness, they invited none other than the President of Uganda, H. E. Yoweri Museveni, to break the ground for construction of the industrial park, with a strong commitment to see through the investment.
Two years down the road, and despite disruptions occasioned by the Covid pandemic, Nile Group has progressed with building the industrial park. At least nine industries are either operational or about to come on line.
Two industries, Nile Rubber and Cable Ltd. and MMP Steel and Allied Ltd. directly employ 2,000 Ugandans in between them.
To Patel, Nile Group’s investments and businesses are aimed at having a positive effect on the economy and Ugandans. Patel, for example, said the 50-percent cost reduction of school uniforms, shoes and books is their contribution towards education in Uganda.
By producing pre-fabricated construction materials, Nile Group aims to reduce Uganda’s housing deficit of over 2.5 housing units.
In addition, they would like to spur industrial development by providing cheap construction materials for and reducing the setup time of industrial facilities (factories, warehousing, etc.)
Investments in a starch factory, on the other hand, are targeting the pharmaceuticals sector.
They are actually intent on establishing an exclusive pharmaceuticals park that leverages the forward and backward linkages of the sector.
Their agro industries, as well as other industries, are systemized to harness synergies and linkages.
Corporate social responsibility
He said they believe in the principle of “live and let live”, revealing that as part of their corporate social responsibility they will build 50 boreholes per year in the area.
The group also ensured that squatters on the industrial park were adequately compensated, in order to allow for smooth setup of the park as well as deepen harmony with the locals.
It was no wonder then that President Museveni, in his response during the breaking of the ground ceremony, thanked Patel and his partners for investing in Uganda.
“I would like to thank Magan (Patel) and his partners for coming to Uganda to help us develop our country but also for having good spectacles,” said Museveni, adding that “they know that in Africa Uganda is in the centre, is peaceful and we’ve rich resources”.
The President said by choosing Uganda for investment and business, the Nile Group is well positioned to access a bigger market in East Africa, Central and Southern Africa and the whole of Africa.
“I congratulate you because you’re far-sighted, you’re good partners, you know what you’re doing,” said the President.
On incentives, President Museveni said Nile Group will benefit from all incentives like companies operating in industrial parks, adding that the focus of the government is not on direct taxation but indirect taxation.
On the pharmaceuticals park, President Museveni promised that Nile Group will be given land because, as he put it, “we want drugs made here”.
Speaking at the same event, the State Minister of Finance (Investment and Privatization), Evelyn Anite, said Uganda is experiencing fundamental change and is on the right industrial and transformative path, adding that “Uganda is no longer a big supermarket for others”.
The Nile Group or the “Magan Patel Model” is testimony that even without direct government support like incentives Uganda’s friendly and supportive investment policies are adequate for investors to take off and contribute to economic growth and development.
The uniqueness of Nile Group is that they have asked for the incentives after already doing so much on their own, like creating 30 companies and building a private industrial park.
Role of UIA
Uganda Investment Authority (UIA) has played, and continues to play, a pivotal role in ensuring that MMP Industrial Park takes off.
The Authority has facilitated building of vital infrastructure like industrial water and power, as is pushing for building of tarmac roads to and within the industrial park.
According to the UIA Director General, Robert Mukiza, the MMP Industrial Park sits well with the Authority’s mission of promoting relevant and equitable industrial development of Uganda.