Can you give us an overview of the history of Southern Range Nyanza since its founding?
Southern Range Nyanza was formerly Nyanza Textile Industries and was taken over from the government of Uganda in March 1996, after starting as a government company in 1954. Since the takeover, the company has experienced a remarkable 180-degree transformation. Today, it employs nearly 3000 Ugandans and is primarily engaged in the vertical processing of cotton and blended fabrics.
In addition to fabric processing, the company manufactures various garments and serves local and regional markets. We have also started exporting armed forces uniforms to Equatorial Guinea. The anticipated growth in the textiles sector is closely tied to the implementation of the African Continental Free Trade Area (AfCFTA). The annual turnover of Southern Range Nyanza has reached $30m.
What has been key to the company’s transformation and how have investments ensured its success to-date?
The company’s transformation has been multi-layered. Initially, our focus was on fabric manufacturing, but we diversified our product range and expanded by establishing a garment division. We also entered the medical subsector, producing personal protective equipment (PPE), including masks and medicated cotton wool, during the Covid-19 pandemic.
Substantial investments were dedicated to modernising our machinery, positioning us as one of the most technologically advanced textile companies in East and Central Africa. We have replaced outdated equipment with cutting-edge technology from the EU and Japan, enhancing our ability to serve a broader market.
Notably, our medical division required a $6.5m investment to establish robust capacity for medical sundries manufacturing, with partial financing originating from Afreximbank. Over the past five years, our annual investments have ranged from $6.8m-10m, facilitating the acquisition of state-of-the-art machinery, including rapier weaving looms from Italy and weaving machinery from Germany.
What are the current production capacities for the garment and medical divisions, and what lies ahead for the PPE division?
In fabric production, we make 30 million metres annually. For the garment division, we produce 25,000-35,000 T-shirts and 2500-5000 sets of armed forces uniforms per day. In the medical division, we manufacture 1.5m packages, each containing 500 kg of medical cotton wool per annum, sufficient to fulfil national demand. We are aware that PPE is cyclical by demand, however, we plan to expand our PPE production across sub-Saharan Africa via the AfCFTA. This expansion is set to begin in the first quarter of 2024, and are active in discussions with various governments, with support from the government of Uganda to diversify exports.
In the future, how does the company plan to enhance value addition in the cotton subsector?
Our vision is to significantly enhance value addition within Uganda’s cotton subsector. Currently, only 10% of the cotton produced undergoes value addition, with the remaining 90% being exported as raw lint. In 2021 Uganda earned $29.1m by exporting 90% of its cotton lint. In contrast, we processed just 5% of the lint but generated $30m, highlighting the incredible potential in value addition. To capitalise on this, we’re committed to investing $30m to establish a 25,000-spindle spinning unit, which is the first step in the value chain. We anticipate beginning this project in 2024 and completing it by 2026. Once operational, this single plant will consume 30% of Uganda’s cotton lint, with an export earning potential of $17m annually.
Our perspective is that Uganda should actively attract more investors of this calibre to achieve comprehensive value addition. With 20-30% of Uganda’s cotton lint being processed by a few major investors, we can unlock the sector’s potential to reach $500m in export earnings.
How will the company utilise its strategic initiatives to grow in the next five years?
Our outlook for the next five years revolves around strategic planning and expansion. First, we are bolstering our production capacity with substantial efforts. Second, we’ve established a dedicated export division with a primary focus on expanding our African presence. Third, we are actively seeking strategic collaboration with the public sector, similar to our recent partnership in Equatorial Guinea, with plans to add three more countries to our portfolio within the next six months.
Our assessment of the future is remarkably optimistic. We aspire to become a $100m company within the next five years and aim to elevate our value addition from 5% to 30%, both of which have been progressing as planned.
