China’s money in Uganda: Where has it gone?

Kampala

President Museveni has not yet set foot in his plush twin-tower offices which the Chinese just completed, but he long took residence in State House Entebbe, which was also built with China’s money.

Just next to the building, Chinese engineers are busy directing works on the expansion of the Parliament building, also made possible by their generous government. These imposing projects, right at the centre of power, are just but a few examples of China’s intense investment in Uganda in recent years.

Still within Kampala, women who go into labour at Naguru Hospital have China to thank for the fresh tiles that line the brand new health facility, a far-cry from the dilapidated building it replaced. Soccer lovers who descend on Namboole when the Uganda Cranes play international football matches may also care to remember China for financing the construction of the country’s only modern sports stadium.

China’s aid has also provided vehicles and other equipment for the police and the army, in addition to providing relief to those affected by war and emergency response when diseases break out. Apart from some of the projects highlighted above, aid from China went to other sectors like transport, especially road construction, communications, agriculture, trade and tourism, education, and some came in the form of debt forgiveness.

China also supported sports and culture, issued unconditional grants and provided trucks to collect garbage.
In the decade between 2000 and 2011, data released by the American research group, AidData, shows that China’s aid to Uganda was an enormous $4.67b, slightly more than Uganda’s budget for this financial year. (See a break up of China’s aid to Uganda by project between 2000 and 2011 on Pg11).

“This is China’s time,” says Mr Henry Okello-Oryem, state minister for Foreign Affairs in-charge of International Affairs. Mr Okello-Oryem says the US and European countries “had the opportunity to build Africa (but they did not succeed).” Now, Mr Okello-Oryem says, “the Chinese are building schools, stadiums, hospitals, power dams, name it.”

No conditions
What Mr Okello-Oryem seems to like most about China’s aid is the fact that they do not peg it on things like human rights observance, democracy and fighting corruption, which traditional donors sometimes insist on.
“Has the song about democracy and human rights turned us into a developed country?” Mr Okello-Oryem wonders, adding: “If I want to give you a chicken or a goat, do I first ask you whether you beat your wife?”
The European Union last year cut budget support aid to Uganda over corruption in the Office of the Prime Minister.

Mr Xu Yuwei, the secretary to the consular at the Chinese Embassy in Kampala, says despite China still lagging far behind developed countries in terms of human development, his country provides aid to Uganda and other African countries in furtherance of “a historical friendship”. Mr Xu says many African countries backed China when its membership to the United Nations was in contention due to its internal politics until the issue was resolved in 1991.

But Mr Mwambutsya Ndebesa, a political historian at Makerere University, sees China’s interest in Uganda, in particular, and Africa in general, as “a continuation of imperialist rivalry over the African continent which started hundreds of years ago.” He says following the end of the Cold War, a “commercial war was always in the offing” between the US, which emerged as the world’s only super-power, and any country that may want to challenge its status. “In this case that country just happens to be China,” Mr Mwambutsya says.

More importantly, Mr Mwambutsya reckons, China’s billions in Uganda “are not necessarily bound to kick-start any serious transformation” because they do not address what he sees as the country’s key challenge – technology.
“Transformation does not happen because capital flows in,” Mr Mwambutsya argues, “It happens because technology flows in.”
Since China is not transferring technology, according to Mr Mwambutsya, the long term effect of their aid to Uganda “is likely to be investment without transformation since Uganda will remain reliant on foreign technology.”

Original sin
He says Africa’s “original sin” was the failure to advance in technology, which made it susceptible to slave trade, colonialism and plunder and exploitation in trade relations. He argues that development is as much about assets and capital as it is about freedom and quality of life, necessitating “a good mix between investment and human rights observance.”

Much of the technical work on Chinese projects, whether in construction or elsewhere, is done by Chinese expatriates, which Mr Mwambuutsya says does not signal a significant departure from the traditional aid structure.

Along with China’s aid has also come people, some of them not very well liked by Ugandans. Some Chinese have set up retail businesses, many of them below the Uganda Investment Authority capital requirement of $100,000 required of a foreign investor.

Ugandan traders hate the competition these Chinese nationals pose. Mr Joseph Sserwadda, a textile dealer on Ben Kiwanuka Street in Kampala, who sources his merchandise from the Chinese city of Guangzhou, among other places, is not happy about Chinese nationals engaging in petty trade in Kampala. “We should be going to China to get merchandise and sell it in Uganda and the Chinese should not be allowed to do the selling here,” Mr Sserwadda says. He wants the government to toughen against the Chinese petty traders, just like other foreigners doing petty trade in Kampala.

Mr Xu says these concerns have been brought to the attention of the Chinese Embassy in Kampala and “we have had various discussions with the government over the matter.” He reckons the problem is partly caused by the fact that “many Chinese, especially in rural China, still live under difficult circumstances,” forcing them to spread out in search for opportunities.

Mr Xu says their embassy is not in charge of Uganda’s borders and since not every Chinese business person who comes to Uganda registers with them. “We cannot control all of them,” he says. Since the first Chinese company set foot in Uganda in 1993 until the end of September 2012, UIA had registered 322 Chinese companies.

UIA figures show that between the same period, Chinese companies had invested $683m in Uganda, excluding the investment by the Chinese National Offshore Oil Company, which bought a one-third stake in Uganda’s oil sector last year.

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