Tuesday September 4 2018

How Uganda fell into China’s charm offensive

How Uganda fell into China’s charm offensive

Impressive. The aerial view of the ongoing construction works at Karuma Hydropower Dam. FILE PHOTO  

By Frederic Musisi

When the former US assistant secretary of defence turned political scientist Joseph Nye coined the theory ‘soft power’ in the 1990s, to mean a nation’s ability to co-opt rather than coerce, it had more to do with soul-searching America’s position in the world after the collapse of the Soviet Union, which was a defining threat at the time. It had little to do with China.
According to Washington-based think-tank, the Woodrow Wilson Center, Chinese scholars did not first approve of Nye’s theory when they studied it; in fact some did not approve it.

Today, the rest is history, as China, touted as the next superpower seems to have fully come to terms that Mr Nye was right after all.
Beijing is fast applying the theory all around the world using mostly billions of dollars in investments to win both minds and hearts of developing countries without dictating many conditions. There is perhaps only one condition: the “One China” policy, the diplomatic acknowledgement that Taiwan is part of mainland China.

That is why Ugandan diplomats hurriedly put the spanner in works to purge Taiwan from the Refugee Solidarity Summit guest list. Beijing pledged $500,000 (about Shs2billion) at the summit co-convened by President Museveni and UN Secretary General António Guterres in Kampala a year ago.
Prime Minister Ruhakana Rugunda, during a meeting with the visiting number four in the Chinese Communist party’s politburo, Mr Wang Yang, on June 14, reinforced that “Uganda has been consistent in its principled support for the One China Policy.”

The two countries, China and Uganda, established diplomatic relations in 1962, nine days after the latter’s independence, and the former became one of the first countries to open a foreign mission in Uganda.
According to Makerere University political science don Phillip Kasaija, in recognition of the “One China” policy, Uganda was one of the 26 African countries that voted for a 1971 UN General Assembly resolution bringing mainland China to the UN seat, replacing Taiwan, a founding member of the UN body. Today Taiwan is not recognised by UN.

Falling into China’s charms
According to Dr Kasaija, China-Uganda relations “have been characterised by soft power” which has been achieved largely through establishment of trade and economic relations.
A 2017 Bank of Uganda study titled “How can Uganda benefit from China’s economic rise?” notes that Uganda’s growth trajectory has been strongly supported by increased economic engagement with China, particularly through commodity exports and infrastructure funding.

“China’s model of growth thus generated huge demand for energy and other natural resources and resulted in upward pressure on global commodity prices,” the study reads in part.
“Uganda, similar to most sub-Saharan economies that are primarily commodity exporters, gained significantly from this windfall, which saw the percentage of raw material exports to China jump drastically from 17 per cent in 2007 to more than 50 per cent by 2015,” according to the study.

And since 2014 when China started experiencing economic slowdown as well as a significant change in its growth pattern, with the composition of its GDP shifting from investment towards consumption, Uganda and its East African Community neighbours were not spared of the aftershocks.
Surprisingly, Uganda, according to analysis of different datasets, is not among the top recipients of Chinese loans/aid. The list is topped by Angola, Ethiopia, Sudan, Kenya, DR Congo, Congo-Brazaville, Nigeria, Ghana, Cameroon, and Equatorial Guinea.

The changing trends
However, according to Finance ministry data, China has since overtaken the 22-member Paris Club (of mainly traditional creditors such as US, UK, France, Germany, Denmark, and Italy) for both lending and foreign direct investments.
The debt sustainability analysis report signed off by the Secretary Treasury Keith Muhakanizi last December indicates that the share of the World Bank’s International Development Association (IDA), which lends to poor countries is on a “downward trend while China’s share has been increasing.”

“Debt owed to IDA has declined from 61.9 per cent of the total stock in the financial year 2010/2011 to currently 45.2 per cent. Over the same period, debt owed to China has increased from 3.3 per cent to 20.3 per cent,” Mr Muhakanizi wrote.
In terms of foreign direct investments, as at end of 2016, China’s investments had likewise topped the list with approximately Shs11 trillion ($3b).

The economic and commercial counselor at the Chinese embassy in Kampala, Ms Zhao Xiufen, told Daily Monitor in email that Uganda currently ranks as fourth investment destination for China in Africa.
China also reigns as the largest project contractor in Uganda with a long list of projects such as the 51.4km Kampala-Entebbe expressway, which cost Shs1.7 trillion, expansion of Entebbe airport costing Shs1.5 trillion, and Karuma and Isimba hydropower dams, which combined cost Shs6.7 trillion.
The Kampala-Entebbe expressway was commissioned in June by President Museveni and the visiting chairman of the National Committee of the Chinese People’s Political Consultative Conference, Mr Wang Yang, who was in Africa to “take stock” of Chinese funded projects in Congo-Brazaville, Uganda and Kenya.

In road construction, Chinese companies are stampeding the Uganda National Roads Authority—out competing each other for tenders. Chinese roads contractors, according to the roads authority, have over the last decade won tenders in the zone of Shs7 trillion. The entry of Chinese construction firms in the Ugandan market is said to have been a contributing factor in bringing the billing rates per kilometer down to $800,000 (Shs2.1 billion) compared to the past when the work was dominated by European and American firms. At some point it was said these were billing $1.2m (Shs3.1billion) on a kilometer.
In the past, Namboole (Mandela) National Sports Stadium built in the early 1990s was the only known Chinese project in Uganda.

Observing. The Chinese Communist party’s

Observing. The Chinese Communist party’s politburo, Mr Wang Yang (second right), inspects a fruit factory in Nakaseke District during his visit to Uganda on June 14. PHOTO BY RACHEL MABALA

Winning hearts and minds
With Western countries still priding in foreign aid and their economic engagement with Africa still at a low ebb, Beijing is scavenging for every opportunity while making itself the dominant economic partner—from providing loans for projects to building them, to increasingly an explosion of new cheap labour and commodities.
During this week’s trip to Beijing for the China-Africa Cooperation (FOCAC) Summit, President Museveni, according to sources, had hoped to reach financial closure with China’s Export–Import (EXIM) Bank to release first installment of the $2.3b (Shs8 trillion) loan for construction of Uganda’s first phase of Standard Gauge Railway (SGR)—the (eastern) 273km line running from Malaba to Kampala.

However, in light of ongoing confusion on management of the lucrative GSR tender, his hopes seem far from reach.
According to sources, the President is trying to renegotiate the railway’s Engineering, Procurement and Construction (EPC) contract, while the Chinese themselves have been increasingly second-guessing the project.

SGR is a classification of modern railway agreed upon under the African Union SGR protocol, of upgrading and linking the continent’s railway system to facilitate continental integration.
The eastern railway line, which in future would be extended to borders with South Sudan and Rwanda, is supposed to be extension of railway line from the Uganda-Kenya border at Malaba to Mombasa port at the Indian Ocean, Uganda’s main gateway.

The two countries, Kenya and Uganda, first agreed in 2008 to construct the SGR but did not formalise arrangements until 2012. Subsequently, they agreed to construct China Class One standard, whose design classification is based on Chinese standards, and definitely funded by China.
Last year, Kenya commissioned the first line from Mombasa to Nairobi, and is now constructing the 120km line from Nairobi to Naivasha at a cost of Shs6 trillion. This is to be followed by the 266km line from Naivasha to Kisumu port costing Shs13 trillion and the 107km line connecting to Malaba will cost Shs6 trillion.

Future of Africa
What is not in doubt though, is China’s munificence in bankrolling infrastructure projects not just in Uganda but across Africa. Broadly, these infrastructure projects—roads, railway, industrial parks and dams—are not just an addition to the leftovers by the former European colonial masters but the future of Africa.

Chinese officials, often taunted by Western countries as up to something sinister equivalent to neocolonialism, have defended investments in Africa as an exercise in altruism.
“We have had 50 years of relations with European economies but nothing has changed about us: for them it is about them,” said former ministry of Foreign Affairs Permanent Secretary Ambassador James Mugume.
“That is how China got the opportunity,” Ambassador Mugume, who served in the ministry for 39 years until retirement in 2016, explained.

“It was around the 2000s when African countries started dealing [with] China to proportional levels. We told them (Beijing) look: after all these years since independence, followed by foreign aid and technical assistance, most African countries have not even transformed from peasantry economies,” Mr Mugume said.
That is when FOCAC was born, as a platform for China and friendly African countries to further collective consultation, dialogue and cooperation mechanism among developing countries.
At the first high level FOCAC meeting in South Africa in 2015, Chinese President XI Jinping announced an investments stimulus package of Shs220 trillion ($60b) for Africa. This week’s summit in Beijing is the second high level summit.

Ambassador Mugume said as was agreed during the initial FOCAC formulation meetings, China has “remained true to its commitment” of prioritising infrastructure development and industrialisation (dams, railways, roads to reduce cost of doing business), and investment in skills development and transfer—to create a new generation of development-minded Africans.
The Chinese language has been introduced in the Ugandan curriculum and every year, Beijing offers hundreds of scholarships to Ugandans to study in Chinese universities.

Is payback for both sides possible?
This newspaper reached out to the Chinese embassy in Kampala for an interview with Ambassador Zheng Zhuqiang but was unsuccessful. However, during previous discussions, Ambassador Zhuqiang reinforced that “what distinguishes China-Africa cooperation is that China always keeps its words.”

“Since the FOCAC summit in Johannesburg in December 2015, the outcomes of the summit have been implemented in a swift and all-around way,” Ambassador Zhuqiang told journalists at a media think tank session in March last year.
He said nearly half of the Shs220 trillion-funding that China promised to Africa at the summit “has been disbursed or arranged” for Uganda including electricity extension to and development of four industrial parks and the $620m (Shs2.2trillion) Osukuru phosphate industrial complex in Tororo district.

Washington based Brookings Institute fellow, Yun Sun, in a 2014 paper titled “Africa in China’s Foreign Policy” argued that while China’s unique economic approach to Africa meets the African countries’ need for funding and infrastructure projects, the model has been widely criticised particularly due to China’s natural resource-backed loans, which raises questions about the continent’s future and its capacity for sustainable development.
“With a few exceptions, there is a strong tendency to assert moral judgments in the assessment: China’s activities in Africa are often characterised as “evil” when they are seen as representing China’s selfish quest for natural resources and damaging Africa’s fragile efforts to improve governance and build a sustainable future.”

Lack of strategy
There are some problems lurking though, Ms Yun argued, pointing out that Beijing lacks an Africa Strategy which indicates that China does not see its African partners as geopolitical equals; the inability to cope with the rapidly expanding Chinese presence in Africa is exacerbated by a lack of political risk assessment, absence of a comprehensive commercial strategy for Africa, and proliferation of China’s commercial actors in Africa as seen in recent years, which has made government supervision challenging and possess challenges for both sides.

In fact, around Kampala like in many African capitals, Chinese presence is evident. Since deepening of relations with Beijing, Uganda has witnessed influx of Chinese nationals engaging in petty trade.
The effect of the increased number of Chinese petty traders in the country is being felt, and local traders are alarmed. Last year the traders under their umbrella union went on strike prompting government to agree to look into the matter. Kampala traders also complain that they are choking under the weight of cheap and substandard Chinese imports. The acting chairperson of the Chinese business community in Uganda, Ms Fang Min, didn’t agree to several requests for interview.
China has become by far Africa’s biggest trading partner, exchanging about Shs626 trillion ($170b) goods a year.

Most popular traders
A 2017 study conducted in Kampala by the University of Florida’s Centre for African Studies notes that Chinese petty traders are the most popular and yet most controversial foreign population that most Africans meet and engage with on a regular basis.

How African countries including Uganda can benefit from China-Africa relations, New York-based consultancy McKinsey, in a country comparative study titled “Dance of the lions and dragons” released last year in July cited a Luganda proverb that “Bwoba tomanyi gyolaga, buli lugudo lukutuusa yo” loosely translated that “If you don’t know where you’re going, any road will take you there” and mentioned Ethiopia and South Africa as examples that have a “clear strategic posture toward China, along with a high degree of economic engagement in the form of investment, trade, loans, and aid.”

Ethiopia and South Africa, McKinsey noted, “have translated their national economic development strategies into specific initiatives related to China, and they have also developed important relationships with Chinese provinces in addition to Beijing. As a result, China sees robust partner countries as true partners in Africa.”
Uganda is undoubtedly still far from this level.

advertisement