ugandaKakira Sugar Works

Company Profile and History

Kakira Sugar Works is a subsidiary of the Madhvani Group of Companies, the largest conglomerate in Uganda. The group also has investments in Uganda, Rwanda, Southern Sudan, Tanzania, the Middle East, India and North America. Forbes Magazine regularly lists the Madhvani family as one of the richest in the world.

Muljibhai Madhvani, a pioneer Indian investor who came to Uganda at the turn of the last century, built the Madhvani empire. By the time of his demise, the Madhvani’s owned Kakira Sugar Works, tea and sugar estates, schools, colleges and recreational centres. By then, the Madhvani Empire controlled about 10 percent of the country’s exports.

During the 1970s, the Madhvani family was expelled from Uganda by then dictator Idi Amin and their businesses were nationalized and mismanaged to near-extinction. In 1985, the family returned to Uganda and resurrected and rehabilitated their businesses and started new ones.

The flagship of the group is Kakira Sugar Works. The Kakira Sugar Factory was set up in the early 1940s, but its operations were halted in the 1970s due to political instability. It re-opened in 1986. Under the Group's management, the Kakira sugar complex has been fully rehabilitated with original financing from the World Bank, African Development Bank and Uganda Development Bank.

Kakira Sugar Works has increased output from 90,000 metric tonnes annually to 100,000 tonnes in 2008 following an increase in procurement of cane from out growers. The number of outgrowers rose from 3,000 to over 6,000 farmers, which in turn increased the acreage under sugarcane cultivation from 10,000ha to 17,500ha.

Besides sugar production, Kakira also generates its own electricity from biogas, which became a key factor in raising the plant’s internal capacity. Of the 20MW generated by the sugar mill, Kakira now feeds 12MW into the national grid.

The Kakira Sweet Factory produces 165 metric tonnes of sweets per month.

In Country Location

Kakira Sugar Works: 10 kms Jinja-Tororo Road; Tel: +256-41-4444000

Services and Products

Sugar-cane is cultivated on the company’s own nucleus estate of over 24,000 acres (9,700 Ha) supplemented by cane from over 4,000 outgrower farmers (with more than 11,000 Ha under cane), for production of sugar. To cater to the needs of the agricultural development of Kakira, the Company established a sugarcane nursery for treated seed cane, a full-fledged Agronomy Section with an Applied Research Centre.

Number of Employees

Kakira employs 7,500 people

Financial Information

The Group’s current turnover in Uganda exceeds US$ 100 million. The Group’s assets in Uganda are valued in excess of US$ 200 million as of April 2009.

Market Share

The Group is the largest private-sector investor in industry in Uganda. Kakira’s market share is 60 percent.

Business Objective

“To supply the Ugandan consumers, our customers, with top quality, affordable branded sugar in partnership with our out-grower farmers and add value to the organisation”

Business Model

The Madhvani Group focuses on diversification and joint ventures with foreign private investors to grow all their businesses. In keeping with its diversification strategy, the Madhvani Group is now examining options for joint-ventures in the high-growth high-tech sectors of telecommunications and related services. This is in addition to other project proposals such as a new sugar complex in North Uganda and bio-fuels (ethanol from molasses; bio-fuel from bagasse pyrolysis; bio-diesel from jatropha, etc.)

The Madhvani Group has entered into joint-ventures with various leading companies-adding value to these partnership through its significant presence in the region and its experienced management team. Each Company is under the overall direction set by a Board with independent directors as well as family members. Operational management is delegated to a professional multi-cultural team, based at the Group’s corporate offices in Uganda, London and India.

Through its charitable Foundation and its corporate social responsibility programme, the Group also contributes to the promotion of scientific and technical education.

Kakira states its key strategies as follows: “Utilise local natural resources; ensure sustainable production with cane from nucleus estate and out-growers; develop and train our manpower; protect the environment; focus on cleaner production; increase production to 150,000 tons of sugar per annum; expand out-grower activities; assist in the infrastructural development of South Busoga (e.g. hospitals, schools, out-grower access roads, etc.); drive wealth creation; leverage our position in East & Central Africa; be a low cost regional producer of sugar; enhance our strengths by utilising sound business practices; strengthen relationships with leading influential regional groups; develop new and vibrant liaisons; develop complementary by products (co-generation of electricity from bagasse, including sale to the grid; sweets and confectionery; alcohol – industrial/potable; tea, soap and others.”

Ownership of Business

Kakira Sugar Works is a wholly owned subsidiary of the Madhvani Group

Benefits Offered and Relations with Government

The Madhvanis returned to Uganda on the personal invitation of President Museveni. In 2008 Museveni commissioned Kakira’s 20MW biogas electricity plant, which sells 12MW to the national grid. He applauded the Madhvani Group for their commitment to investment and promised government support. “You deserve support from the Government. We shall give you all the support you want,” Museveni stated. He warned detractors, whom he said mobilized the youth to campaign against certain manufacturers. “These manufacturers are good for the poor people. It’s the poor who need jobs, who need free education for their children. Therefore, anybody who interferes with investors is an enemy of the poor,” said Museveni. He said he would also mobilize the youth “to eat alive those fighting the factories” just like he did during the war in Luweero which brought him to power in 1986. The President pointed out that the factory’s sh42 billion annual tax contribution was enough to run the two districts of Wakiso and Mityana, to which the Government allocates sh32 billion and sh12 billion respectively.

There has been substantial opposition from the Acholi people to the sugar factory and to what they term “Musiveni’s support to land grabs by foreigners.”

In 2007 the Madhvani Group announced plans to build a new US$80 million sugar complex in northern Uganda. Madhvani has made much of its fortune since the 1980s at its Kakira Sugar Works factory in Jinja. Over 100,000 people depend on the plant, and the community has seen jobs, schools, hospitals, roads and electricity arrive all on the back of the industry. The government was to hold a 40 percent share in the deal, support infrastructure development and offload its stake on the stock exchange once the project was operational. However after two years of promoting and wrangling, the deal is nearly dead. The property lease remains mired in a court case brought by locals who accuse Madhvani of attempting to steal their ancestral land.

The Acholi has a deep resentment towards Museveni due to the fact that in 1981, Museveni instigated a brutal rebellion to wrestle power from the Acholi. The north lost the war when Museveni took over the country in 1986, and the Lord’s Resistance Army (LRA) has been fighting the state ever since. Northerners have suffered the bloody fallout.

So with the presidential stamp of approval, the Madhvani proposal was immediately and vehemently rejected in the north. Acholi politicians jumped at the retributive chance to accuse Museveni of fronting for investors for personal gain. “You may take my statement as political,” says Simon Oyet, an Amuru MP who helped his constituents file the land case against Madhvani, “but that man [Museveni] does not mean well for us.” Madhvani says the political battle that has ensued is depriving northerners of the development they deserve, and Ugandan industry of its potential.

"It is economic development and industrial development that will bring empowerment to the people there by way of employment and creation of viable opportunities for investment,” says K.P. Eswar, director of corporate affairs for the Madhvani Group. Eswar says Madhvani has received invitations from governments in Southern Sudan, Ethiopia, Rwanda and Angola to open the new factory abroad if it is barred from leasing land in Uganda. The company is just about fed up: "We are investors, we are not politicians – if you don't want us, fine. We will go to another area."

If the Madhvani deal goes through, it will represent a conversion of once customarily-owned private land to public land, to government-owned leased land, all without proper compensation.

The Madhvani family has also contributed liberally to the coffers of the ruling National Resistance Movement (NRM) party.

Product Development

Besides raising the output capacity at Kakira, the Madhvani Group is also expanding its cane growing estate to Amuru District in northern Uganda, in a bid to spread its cane supply base away from the limited expansion opportunities in Jinja.