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EAMV Fulfils Demand in Medical Consumables Sector

Brian Kavuya, Managing Director, East African Medical Vitals (EAMV), talks to World Business Journal about the role it plays in the medical consumables sector and the Buy Uganda Build Uganda policy, and how EAMV plans to expand into the synthetic rubber gloves industry.

How did the partnership that formed East African Medical Vitals (EAMV) originate?

The backstory behind this partnership is quite intriguing. Legacy Group operates across various sectors, including real estate, financing, fast-moving consumer goods distribution and farming. Vvsaol Investments specialises in the import and distribution of medical consumables in Uganda, serving both the public and private sectors. Initially, Legacy and Vvsaol collaborated on joint ventures, sharing resources and proceeds from their respective business activities. However, an exciting idea emerged when the company realised the potential of manufacturing medical gloves. This idea was fuelled by the government’s strong emphasis on local manufacturing through initiatives like Buy Uganda Build Uganda (BUBU) policy and the success story of Cipla Quality Chemical Industries. We recognised an opportunity to contribute to local production in the medical consumables sector.

At the outset, we sought the involvement of established firms to conduct a feasibility study for the glove manufacturing venture, but we found their efforts lacking. Around that time, Asigma Capital, an investment advisory firm, expressed interest in the project. Asigma’s expertise and experience made them an ideal partner. To facilitate this collaboration, we structured a deal that combined cash payments and equity, as raising the required funds for detailed feasibility studies can be a challenge for local investors. This partnership brought together diverse capabilities, including market understanding, financial resources, technical expertise and project management. It allowed us to complete the feasibility study, secure financing and establish EAMV, contributing to the local medical consumables sector.

What were the key steps involved in securing financing, and establishing the manufacturing operation for your medical supplies business?

We began by deciding whether the public or private sector would operate as our primary offtaker, leading to a strategic 10-year government offtake agreement, which unlocked essential financing. We invested in sending 13 Ugandan engineers to Malaysia for hands-on training, enhancing their technical capabilities. For financing, we sent applications to various sources, with the East African Development Bank emerging as our strongest supporter. They provided $6.3m in financing, while the remainder of the initial investment for our plant, totalling around $13m, was invested as equity and local financing for working capital from EcoBank. These funds were allocated for working capital and debt, supporting the growth and development of our business.

What types of gloves do you manufacture, and what is your current manufacturing capacity?

We manufacture surgical and examination gloves and plan to expand into synthetic rubber gloves soon. To reduce reliance on imports, we are investing in rubber tree farming and local chemical production. Our ongoing expansion project, backed by Shs21bn from the Uganda Development Corporation, aims to double our production capacity and reduce operational costs. Currently, our production is 6m pairs of gloves per month, which is equivalent to approximately 70% capacity utilisation. Around 70% of our production serves the government, and we are in discussions to expand these contracts. In the private sector, pricing challenges persist, and we are actively advocating for the implementation of import duties at the East African level to create a more equitable competitive environment.

What are the main challenges that your company has encountered?

Securing long-term financing has been challenging, mainly due to the lack of government support. It is essential for the government to reconsider local bank pricing and investment securing policies, particularly for pioneering investments that require a mix of equity and debt with favourable debt terms.

While we are fully certified by the International Organisation for Standardisation (ISO) for quality and occupational health, safety and environment, finding local certifying bodies which are accredited for the relevant quality standards as well as recognised by major international clients, especially for medical consumables, has been a challenge. This has led EAMV to seek certification from international bodies, such as ISO.

How would you describe the investment climate in Uganda?

The investment environment in the country is quite favourable, offering attractive incentives to investors who have the financial means. However, if you have a great idea but lack the funds, that is where the real challenge arises. The investment landscape is promising, provided you have the financial resources to capitalise on it. Learning from our experiences with development banks, we have seen the importance of prioritising project viability over collateral. Government support in building the capacity of financial institutions would enhance the investment landscape.

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