Uganda: An Exclusive Interview with Abid Alam of Top Conglomerate Alam Group

Interview with Abid Alam, Managing Director of Alam Group

What is your assessment of the sector as a conglomerate in Uganda?

Uganda has been quite a growth area over the years. The demand curve has been growing consistently and then tapered off in about 2011. There was a lot more investment and supply began to exceed demand in many products and services. The government has been working to open up the regional market. But the regional markets have their own issues in terms of what they can and cannot absorb based on trade treaties with other countries. Uganda is a cheap, competitive, and more focused on quality producer of product. In time, we will stabilize ourselves in those markets in terms of supply. The market here has also diversified a lot. There are a lot of young people who have been exposed to outside countries and are now demanding quality services delivery. The environment is changing. There is a trend change and possibly, there is a need for those of us in business to reinvent ourselves which is what most of us are doing.

How competitive is the sugar market?

Uganda is a surplus country in sugar. We produce in excess. Somehow, we all seem to be surviving and selling our product domestically and in the region. Uganda itself is not rich in per capita consumption compared to our neighbors. We have a while to go. The excess capacity is being absorbed into the region. In the future, we will be a cheaper production country with more volume as more capacity is being added. We have a natural competitive advantage in terms of land availability, water, manpower, expertise. There are a lot of plus points that are available in this country that are beginning to attract more and more investment.

What are your competitive advantages? What makes you stand out?

We stand out by our presence in the market. Despite many ups and downs, we have been here for a long time. We live by our word of delivering goods and services to our customers. These are some of the things that we excel at. We are not fair-weather friends. We are all-weather friends. We have built a serious reputation over the years.

What can you bring to the region in terms of the sugar industry?

In the medium term, we will continue to grow and try to get more access to bigger markets, more consistent markets, and try to increase our turnover and our market strength.

For us, in terms of the region, we are filling a deficit gap that exists. In terms of consistent production, services to the farmers – plowing, harrowing, seed cane, extension services – we are doing a lot. Where we have established our sugar factory, we have done a tremendous amount of work in CSR. The living standards and lifestyles of the people there have improved dramatically. You can see all the good things that have happened with schools, roads, health services, and new developments since we have started our operations in those areas. We are also a net producer of power which we then sell to the grid. We have added a lot of good things to the communities.

What other sectors are you strong in?

We have other traditional businesses like the Casements Africa where we produce structural glazing, curtain walls, partitions, windows all for major buildings in the town. We have undertaken and continue to undertake big contracts. We also produce boots, oxygen gas, etc., as well as smaller endeavors. We are in the process now of investing in a second sugar factory which we hope will be in operation early next year. By that we will be able to increase our sugar production capacity.

Is the market competitive for oxygen gas or are you the only producer?

The oxygen gas market is competitive. But the market is becoming more sophisticated. Hospitals demand better quality oxygen, better quality nitrous oxide for operations. Testing gases for laboratories is also becoming a bigger market requirement.

In the boots industry, what to you bring to the market that is different?

We have good designs in our gum boots. We produce both heavy duty and light duty. The life of the boot is quite good and hard wearing. We produce from prime materials and we see good feedback from the market.

What do you provide in the real estate sector?

In the real estate sector, we provide both commercial and residential buildings. However, the sector has become quite saturated now. Rents are beginning to fall. This year, we will probably not do much in the real estate sector. Next year though, we will kick off some new projects where we will build some new apartment blocks or office complexes in prime areas where we already have real estate so that we can fill the need as it arises.

What other areas are you present in?

We will now begin to focus and build up capacities in our present areas. We want to make these areas very strong again in terms of efficiency, technology, cost of production, and market share.

Are you looking for partnerships?

If the technological partners, the technology, the ideas, and finance at low cost are available, we would definitely be open to receive proposals. We have weathered another tough time and survived and now it is a question of streamlining our operations and moving forward.

What is your international reach?

We do not do much internationally. We work mostly in the regional markets in Kenya, and do a few projects in South Sudan, Tanzania, Rwanda, and DRC.

What are your main projects that you will develop this year?

We will put up another sugar factory this year. We are trying to do this as much as possible through equity only and not borrowing.

Do you have an equity partner for this?

We are doing this project through our own funds rather than equity from outside.

What is the factory going to bring apart from capacity?

We are developing our own land, approximately 10,000 acres, to grow cane. The advantage that we will have is that the cost of production will be much lower. We plan to bring this model to our other factories too and grow more cane if everything goes well. Profitability will improve considerably and the return on investment will be much better.

What is one of your success stories?

We have several success stories. We are the first company in this country to make steel from locally available iron ore. We have a sponge iron plant in Jinja where we produce sponge iron which then goes on to be made into steel. We were one of the first in the country to put advanced technology into a sugar factory, despite some of the long-time players having been in the industry for quite some time. Since then, the technology change has also taken place within their own factories. At the moment, we will not get into steel because the market is highly competitive. If it happens to open up again, we will consider it in the future.

What is your vision for the future of Alam Group?

The policies from the government are quite reasonable in general in the country. The growth pattern has shown reduction. However, we have resilience as one of our strengths and we will survive. Everyone in the market who is of any significance knows of our Group. We have that type of market reach. In the medium term, we will continue to grow and try to get more access to bigger markets, more consistent markets, and try to increase our turnover and our market strength. This includes developing more market in Kenya as well as Uganda by becoming more competitive.

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