I made it here in Uganda – Chinese Investor Mr. Zhong
[Mr. Zhong’s entrepreneurial journey, from rags to riches, is relatable, in many respects. It speaks to the fact that one can make it here in Uganda, by seizing opportunities the economy affords.]
From China to Uganda with “rags”
Mr. Zhong Shuang Quan (commonly called Mr. Zhong) came to Uganda in 1999, after graduating with Bachelor of Artsin Business Management from the Sichuan Normal University, China. He got an opportunity to work as a language interpreter (Mandarin-English) in Uganda. He never hesitated; he seized the opportunity with both hands.
“I came to Uganda in 1999, after I graduated from university in China. I first worked as a language interpreter for a Chinese government programme at Makerere University”, says Mr. Zhong.
After a short stint, Mr. Zhong quit the job at Makerere University and became a salesman for a Chinese trading company in Kikuubo, a busy and bustling business hub in downtown Kampala, and a fulcrum for traders from far and wide.
“We mainly dealt in agricultural equipment and products and household items, mainly imported from China. I used to earn just 300 US dollars”, he recounts.
Learning how to fly
According to Mr. Zhong, a key attribute of any business person is to learn the business environment – how it works, how it functions.
“Kikuubo taught me a lot about Uganda’s business environment. I kept learning and unlearning about doing business in Uganda, the policies, the challenges, the products, their sources and the players”.
To him, the lessons he learnt in Kikuubo he could not have gotten elsewhere.
Mr. Zhong says another attribute he developed early was saving part of the 300 dollars he was being paid.
“I kept saving money until I had saved enough money to import a container of assorted merchandise from China. That is when I quit the job and ventured on my own, but still in Kikuubo”, he says.
From one container, his shipments kept increasing, till his transformation into a big time importer and trader!
Going for import substitution
Mr. Zhong says he realized that it cost so much in terms of money, transportation and time to import goods. That is when he set out to find ways of producing locally the very products he was importing from China, mainly household items like plastic cups, plates, basins, jerricans, flasks, baskets, etc.
“After four years of importing household products I started my own manufacturing plant, Heng Shang Plastics, in Bugolobi to produce plastic and other household items we used to import from China”, he narrates.
Zhong’s Industries in Kampala
Business was good and soon Mr. Zhong’s factory diversified into producing packaging materials for beverages, processed goods, medicines, oil and pesticides, amongst others.
“So far we are one of the biggest manufacturers of plastic products in Uganda. We are among Top Five manufacturers of plastic products in Uganda”, he says with contentment.
Diversification into other businesses
Mr. Zhong knows first-hand why one should not put all his or her eggs in one basket. As he grew his Heng Shang plastic products manufacturing and trading business, Zhong decided to venture into other businesses. The year 2015 was quite magical for Mr. Zhong’s diversification moves.
He set up Bugolobi Hardware City – a sprawling showroom for not only his products but also those of other manufacturers and traders. The City is a one-stop business centre comprising tens of different businesses.
To plug the supply chain challenges, Mr. Zhong set up a logistics company, based in Kenya, but operating throughout the East African Community.
Taking advantage of Uganda’s fast-growing real estate sector, Mr. Zhong also set up Goodwill Estates, now one of the fastest growing real estate establishments in Uganda.
To leverage his financial interests, Mr. Zhong bought shares in Orient Bank, becoming one of the bank’s key shareholders, although he adds that he is now in the process of selling off his shares to venture into other investments.
Mr. Zhong also snapped up the supply of materials for the construction of the 600-megawatt Karuma Hydropower Dam Project, which he attributes to the dam’s fast construction progress, as far as materials are concerned.
Some false starts
Success and fast rise aside, Mr. Zhong admits that this has not been without pitfalls. For example, he reveals, he once ventured into the Tanzanian market but pulled a hasty retreat, on account of comparatively stringent and bureaucratic business and regulatory environments.
Mr. Zhong also did sand mining but stopped, due to environmental and other concerns. He was also at one time an agent for Sino Trucks in Uganda, but left that too.
“From being a worker then starting to trade goods in one container, I have now grown to run Zhong’s Industries Limited Empire,” proudly says Mr. Zhong, adding that “three of our companies are among Top 50 taxpayers in Uganda”.
Jewel in the crown
Of the five business outfits in the Zhong’s Industries Empire, the one that gives Mr. Zhong the most name recognition and plaudits is Zhong’s Natural Rice Farm.
The 6,000-acre paddy rice farm, with a processing factory, is located in Bukula Sub-county in Lukaya, Kalungu District in central Uganda, about 100 kilometres west of the capital Kampala. The rice farm specializes in a high-breed, disease-resistant, fast-maturing (maximum of four months) Chinese rice variety that yields 10 tonnes of rice per acre, four times more than other local varieties.
A 2015 encounter with then Uganda Investment Authority’s Director Investment Promotion and Development, Mr. Lawrence Byensi, and the Chief Coordinator of Operation Wealth Creation, Gen Salim Saleh, during an investment promotion mission in China, lured Mr. Zhong into farming. Mr. Byensi (below) is now UIA’s Acting Director General.
Mr. Zhong says on his return to Uganda, after the encounter in China, he went to Uganda Investment Authority an applied for an investment license, which was, as usual, processed in record time, after he fulfilled the licensing requirements.
“Initially we started with small acreage of 500 acres because I was uncertain of the farm’s viability. We have since expanded to 6,000 acres although the rising water level of Lake Victoria has claimed 2,000 acres, leaving us with 4,000 acres under cultivation,” Mr. Zhong says.
The farm currently produces 10,000 tonnes of rice annually, with production going northwards year on year. Uganda’s annual rice production averages 240,000 to 250,000 metric tonnes, leaving a deficit of 100,000 tonnes.
With rice production growing at an average annual rate of 12.40 percent, Mr. Zhong points out that therein lies investment opportunities in rice farming, positing that if Zhong had just 10 paddy rice farms, the size of Lukaya’s, Uganda’s 100,000-metric-tonne rice deficit would be plugged.
Why rice, and not maize?
Mr. Zhong says since maize grain is a staple food in Uganda, many people often ask him why he chose rice over maize, let alone going into farming, in the first place – from manufacturing, supplies and trade, and banking, and as he puts it, “from a tie to boots?”
“My answer is always that first and foremost farming is a business just like any other business. Second, I have a farming background, particularly in paddy rice. When growing up in China, my village had a long tradition of farming rice and other food crops. Third, I am a beneficiary of this great country Uganda, which has given me so much, so I have to give back to society and food security is one way of giving back”, he explains.
Mr. Zhong contends that rice has been instrumental in Asia’s economic development by ensuring food security and healthier and longer lives. He reasons: “In Asia, the rice growing tradition dates back thousands of years. It has helped in ensuring food security and has contributed to healthier and longer lives of the people. In Hong Kong life expectancy is 86 years, while on mainland China it is 78 years. So, a good food structure of any society is very important.”
According to him, the essence of rice, as a food security crop, can best be understood during a pandemic, like now with Covid-19, adding that “our rice is organic and you can’t ascertain the healthiness of imported rice in terms of period, level of contamination, taste, use of pesticides and so on”.
Jobs for Ugandans
Mr. Zhong says he initially wanted the farm to be largely mechanized, but changed the idea after witnessing rampant unemployment, hence the option of balancing machines with manual labour. This, says Mr. Zhong, is aimed at providing jobs for especially young people.
“I saw a lot of unemployment, so we do not just want young people to have jobs but also acquire knowledge, skills and right mindsets which they can deploy later and elsewhere, especially in farming. They also need incomes to cater for their family needs like food, shelter, clothing, medicines and school fees”, he explains.
To drive his point home, Mr. Zhong emphasizes that the sprawling farm which, before Covid-19, employed 800 people (now they are 500), has just three Chinese expats.
“Our farm is simple. We only have three Chinese on the farm, the rest are Ugandans. The Chinese expats are helping to transfer knowledge and skills to Ugandans,” he says.
Transfer of knowledge, skills
The farm has a clear and deliberate approach to transfer of knowledge and skills. The workers learn-by-doing how to operate machines like tractors, pumps, combine harvesters, drones, as well as the rice mill.
A workshop is also on location for training skills in mechanics, metal and wood works, etc.
Impact on society
Mr. Zhong chose a longtime acquaintance in Kampala, Victor Mpinga, as the farm’s community liaison and communications officer. Mpinga reveals that he used to be self-employed and also dabbled in some coffee farming, until Mr. Zhong led him to Lukaya.
“I am the farm manager, but I have also transformed into an out grower for the farm,” says Mpinga with a glow in his eyes.
Mpinga, who now owns 10 acres of rice on land adjacent to the farm, and plans to increase the acreage because, as he puts it, “the venture is lucrative and rewarding”.
“To tell you the truth I don’t regret leaving Kampala for Lukaya. Over the few years I have set up houses in Kampala, I take good care of my family and have big dreams for the future,” he says emphatically.
According to Mpinga, most workers on the farm came when clueless on what the future held then, but they now have a purpose in life, adding that he has personally convinced six people to “leave the comfort zone of Kampala and go work in the paradise that is Lukaya”.
“They are all doing well, from nothing. For example you have young women, divorced women building two or three-bedroomed houses” Mpinga says, adding that some have since risen from being casual workers to field supervisors or managers.
“There are many who have bought land, built or are building homes here and in their villages, and there are those who have set up businesses, or are supporting their families back home”, adds Mpinga, who attributes these relative successes to Mr. Zhong’s strategy on attitude and mindset change.
In the “Zhong ideology”, work is not an end in itself but a means to achieving higher goals. In that case, it is not so much about the farm making money, or people working on it, but also about people transforming their lives.
According to Mpinga, they have made a deliberate effort that all workers’ payments go through the local financial system – banks or microfinance institutions – in order to institute financial hygiene. He reveals that they have an affordable loan scheme whose main focus is economic empowerment of the workers.
The workers are paid a wage of 10,000 shillings daily, with bonuses for overtime. They are also offered lunch. The workers are paid every fortnight, on a Thursday, and that is when the local bank in Lukaya gets the most number of clients in a single day. The positive effects are felt in the local economy – expenditures on rent, food, healthcare, shop items, personal effects, leisure, transport, name it.
Indeed there is even a market on the farm, for locals to sell items, particularly foodstuffs.
A boon for Lukaya Town
Having an additional 800 income-earning individuals in a rural town is no mean development. It also means more money in circulation in the local economy, which translates into aggregate demand, a key ingredient for increased business activity, economic growth and development.
Thanks to the farm, that is already happening in Lukaya. According to the Town Clerk, Mildred Anne Nalule, the farm and factory have not only created jobs and food security but an economic boom for the town.
“They are paid weekly, or I think every two weeks, and all that money gets into the town,” says Nalule, admitting that as a local government they also collect revenues.
To Nalule, the positive impact of the farm on the town cannot be overemphasized, noting that as the town’s leadership they “would not want to trade it for anything, nor allow anyone tamper with its operations and growth”.
Florence Nyakato came from Bushenyi District in western Uganda to work on the farm. She says she had no inkling of what awaited her, but now proudly affirms that her experience has been transformative. She reveals that she is now able to fend for her two children back home in Bushenyi and her aging parents.
“Young people should not fear to go out of their villages. I feared to come here but I fear no more. Come and work instead of staying home and doing nothing,” she counsels.
Another worker, Benon Nikiringihimana, came from Kisoro, in southwestern Uganda, to work on the farm. With little formal education, he has since risen to become a field supervisor and is doing well.
“I built a small house for my family, I pay for education of my children and I bought a bodaboda (motorbike taxi) to supplement my income,” says Nikiringihimana, who proudly adds that he now also has an account in the bank.
Owning a bank account may appear insignificant, but it is a game changer.
Mpinga says the rice out grower concept is gaining traction, especially after the workers and locals have started to understand its relevance. He says now the farm has dozens of out growers, many of whom are former workers.
Andrew Ojambo, from Bugiri in eastern Uganda, came to work as a casual labourer. He borrowed from the farm’s loan scheme to buy land and started growing rice. As business boomed, he quit the job to become a “full-time” out grower, now owning seven acres of land, with ambition to keep growing.
“I regularly sell a tonne or two of unshelled rice to the farm, each kilo goes for 200 shillings”, says Ojambo, standing next to his flashy sport bicycle.
Ojambo, who employs two young people, encourages young people to “work hard, invest small and earn a lot”, success concepts he must have picked on the farm.
Giving back to society
Mr. Zhong says his focus is on supplying clean and safe water to those at the base-of-the-pyramid. To date, they have built 10 boreholes and plan to build more.
“We do our charity work through China Charity Foundation, run as a family charity. We provide clean and safe water, boreholes and deep wells, to vulnerable and marginal communities.
“For poor people, access to clean and safe water is very important. They need water most, and also food. Water and food lead to a healthy life.
“That is why we are in the area of supply of clean and safe water for poor people and doing farming to ensure there is food security. A family without clean, safe water and food is more vulnerable to many other problems like diseases,” Mr. Zhong says.
According to Mpinga, they have now started getting involved in the community by, for example, sponsoring a local sports academy, as well as supporting local religious and special interest group initiatives.
The farm is now increasingly being used by schools for field work, especially for students of geography and agriculture.
Mpinga reveals that schools’ interest in the farm shot up since 2019 when a question on paddy rice farming came up in national exams and students who had visited the farm excelled.
In addition to students from Kalungu District, they now receive students and other visitors from other districts like Masaka, Mpigi, Wakiso, and even the capital Kampala. Requests from university students interested in doing research in various aspects of the farm’s “ecosystem” is also increasing.
Resultantly, the farm is now developing a clear framework on the intersectionality between farming and education.
Rosy as the farm’s story looks, it has not been without some pitfalls.
The farm has had to contend with claims of destruction of the environment and the sensitive ecosystem, to which Mr. Zhong responds: “I pray for people to understand that we are not destroying wetlands. The centre of nature are human beings. We need to take care of our lives and take care of the environment. In wetlands you cannot do large-scale arming like we are doing.”
To him, they are only growing rice under the right conditions, adding that “if we don’t grow rice there, grass will grow there”.
Response to Covid-19
Like many companies, Zhong’s farm has been quick to set up mechanisms of reducing the spread of Covid-19. Community audio towers (CATs), commonly known as “bizindalo”, have been set up, blaring awareness and preventive messages to workers, clients and members of the public.
Proper hand-washing facilities have been set up to ensure proper hygienic practices which, together with other standard operating procedures, are strictly enforced.
Mr. Zhong has roaring ambition to keep expanding the rice project. From one side of the road, the farm now occupies both sides of the road (on the Mpigi-Lukaya stretch of Kampala-Masaka highway).
“We are going to expand even farther,” asserts Mr. Zhong, who then asks whether I was able to tour the whole farm, to which I retort “No”. The far reaches of the farm merges with the blue sky, suggesting that the farm sits on an expansive swathe of land.
Agro-industrialisation the key
According to Mr. Zhong, Uganda’s competitive advantage lies in agro-industrialisation, on account of its conducive climate and fertile soils.
“We plant rice daily, we harvest rice daily, we produce rice daily and we sell rice daily. This you cannot find in most parts of the world. We call it agro-industrialisation,” marvels Mr. Zhong.
He adds: “The climate here is very good, unlike in China that is why we need to focus on agriculture and industrialisation.”
Plans for the future
The next phase, according to Mr. Zhong, is the development of a comprehensive knowledge and skills transfer arrangement for the farm to cater for the future needs of the workers, out growers, communities and educational institutions.
Thanks to his Chinese roots, Mr. Zhong is a firm believer in the proverb “You give a poor man a fish and you feed him for a day. You teach him to fish and you give him an occupation that will feed him for a lifetime.”
Uganda, my dream place
That Uganda is at the bottom of Mr. Zhong’s heart cannot be overemphasized:
“I call myself a Ugandan living the Ugandan dream, while others think of living American or European dreams. When I came to Uganda as a young graduate I was earning just 300 dollars. Now I have this huge business empire here. I made it here in Uganda. That is why Uganda is a great destiny for me. That is why I have to do something, I have to give back to Uganda through the right corporate social responsibility. It is Uganda that made me achieve what I have achieved. I have to give back to society.”
Mr. Zhong stresses again and again that he has spent, literally, half (and the most productive part) of his life, in Uganda, and, therefore, in essence, he is “as Ugandan as any other”.
Contribution to the economy
That Mr. Zhong is proud and passionate about his contribution to the Ugandan economy is unmistakable.
“Through my businesses I am producing products, reducing import bill, paying taxes, creating employment for the people, and giving back to society. We need to help the country to grow and transform into a modern country,” he says.
He points out that his chain of companies never get or push tax holidays from the Government:
“We believe Uganda needs taxes to grow and use taxes to fund social services like education and health and build infrastructure. I don’t need any tax holiday. The difference between me and some other people is that I pay taxes. I believe my contribution in taxes will help Uganda grow and develop. If you make business through tax waivers then it is not a business”.
I still had to ask Mr. Zhong why he keeps investing and reinvesting in Uganda. And his answer?
“The economic policy environment in Uganda is much better for business and investment compared to other countries in the region. I have seen first-hand the peace and stability under the leadership of President Museveni. There are efficient systems like tax collection by Uganda Revenue Authority, investment licensing, business establishment, and so on. I have had businesses in Tanzania but had to close due to bureaucracy. In Kenya I only have one business, a logistics company. All my businesses are in Uganda because the systems are favourable and efficient. The people of Uganda are also very good.”
According to Mr. Zhong, Uganda has great investment opportunities – for both domestic and foreign investors and individuals. To him, the structure for investment is there – resources, markets, infrastructure, workforce, policy and regulatory frameworks, peace and stability, etc. What is critical is the agency of the people to seize and run with the investment and business opportunities.
Parting words for Ugandans
Mr. Zhong has this parting words for Ugandans:
“My message to Ugandans, especially the youth is, first, we need a good government with good policies to attract the right investors and investments, especially those that treat local entrepreneurs fairly. We also need to treat older investors well. When we have many good investors, we will create products and jobs, pay taxes and enable Ugandans to learn new knowledge and skills, learn how to do business and then they can turn out as investors in their own right.
“Second, change habit. Start saving. Doing business is not a one day thing. You have to keep saving to start a good entrepreneurial journey. When you start to walk you will always reach your destination. If you don’t save now and there is an opportunity you can’t grab it.
“I had a job, saved, then I started getting goods in containers … one, two … until now I have a whole group of companies, among Top 50 taxpayers in Uganda.”
UIA’s facilitation role
The Authority keeps tabs on the operations and progress of the farm, to ensure that it is on the right trajectory. To that end, a senior officer, Martin Muhangi (deputy director investment promotion) works in close collaboration with the farm.
David Rupiny is UIA’s Media Relations Executive