Uganda-China Relations: Half a century of mutual gain

On October 18, 1962, ten days after Uganda declared independence; China established diplomatic relations with the new government.

Uganda has in the past 50 years gone through a cycle of progress, turmoil and again steady progress. Comparatively, after staving off imperialist advances, China closed its doors as it slowly but systematically built an economic powerbase that has today kept the world in awe.

What is special about China-Uganda relationship?

China has stood with Uganda and Africa at the continent’s major milestones. In the struggle for independence, China echoed its voice in support of Africa’s struggle for independence.

With the political independence attained, Africa faced a new crisis-neo-colonialism-which was later described as the last stage of imperialism in which Africa and Uganda enjoyed a slanted economic relationship with the west. Once again China has emerged as an honest partner in the struggle for economic liberation.

China has established the Forum on China-Africa Cooperation (FOCAC) which is emerging as a platform of mutual benefit and shared interests through open discussions and building trusts.

In Uganda, China recently overtook the United Kingdom as the biggest investor in the country. For Africa, China’s investment in the continent has grown rapidly in recent years, surging from $490 million at the end of 2003 to $14.7 billion in 2011.

“China pursues a win-win strategy of opening up, which means that China aims to develop itself amid the common development of all developing countries. We strive to enhance economic cooperation with Africa and accelerate African development through our own development,” said one Chinese official.

Also, about 10,000 Ugandans travel to China annually mainly for business. Grants extended to Uganda and the continent is increasing while a lot of progress has been made in debt cancellation, tariff exemption, and provision of concessional loans.

China hopes that in conducting cooperation with Africa, it will adhere to the principles of mutual benefit and common development, making sure funding will be result-oriented, without strings attached.

China’s contribution to Africa’s economic growth is 20%. In 2010, Uganda exhibited at the Chinese expo in Shanghai and received grand reception as well as great international exposure that opened up new gates of investment and tourism.

Close to 30,000 job opportunities have been created for the local Ugandan populace emerging from the about $596m worth of foreign direct investments sunk into Uganda between 1993 and 2011.

In 2012, a major Chinese firm China National Offshore Oil Company, (CNOOC) also entered a partnership with Uganda to exploit the oil-one of Uganda’s most prized discoveries in recent years.

In 2011, the amount of bilateral trade reached $400m, with China’s export to Uganda amounting to $359m, increasing by 43.7%, and with Uganda’s export to China totaling $40m, jumping by 49.5%.

Some of the most elegant features like the gigantic Namboole Mandela National Stadium were erected using Chinese funds. The others visible features are the foreign affairs ministry, national statistics offices.

The Kampala-Entebbe highway costing about $350m will be built using credit from China. Others visible features are the Uganda-China friendship agricultural technology demonstration centre in Kajjansi. China has also donated anti-malaria drugs to Uganda and helped build the Naguru Uganda-China friendship hospital that is already in use.

Besides CNOOC major Chinese companies are also on course to undertake major projects like the Karuma hydro power station and Pensions Tower.

On the telecommunications front, Chinese firms are equipment suppliers rather than operators in Africa and Uganda in particular. Numerous high-profile Chinese telecommunications companies, including Huawei technologies, ZTE Corporation and Alcatel-Lucent Shanghai Bell, have entered the market. Chinese telecommunications products and services are now available to over 300 million consumers in 50 African countries. Chinese firms have constructed 3G networks in addition to establishing national trunk optical fiber communications networks and e-government networks for over 20 African countries. These have greatly inspired Uganda and many other African countries to continue looking to China for Optimistic leadership.

Through collaborative efforts, Chinese firms have not only provided Africa with good infrastructure at a low cost, but have also trained a large number of African technicians and workers. The composition of investors has also diversified from a state-owned enterprise majority to a mixture of state-owned, private and self-employed businesses, whose investment took the forms of both solely-funded enterprises and joint ventures. As the management of these businesses became more international, China’s investment in Uganda has also become gradually diversified

With the faith in a healthy population with a stronger purchasing power, Uganda, just like China has not only pushed for faster regional east African economic integration, but also rolled out several national entrepreneurship programs such as ‘Boona Bagagawale’ (prosperity for all program) where government mobilizes funds for organized individuals and groups to do business. Just like china has been doing from the 1980’s when Chinese businesses relied heavily on government-sponsored assistance projects to gain a presence in local markets.

Opportunities in challenges

In what appears like a challenge and still unexploited field, there exists real opportunities in the Special Preferential Treatment (SPT) offered by China to Uganda to export goods at zero tariffs.

There are over 4,401 products eligible for export to China duty free. Some of the products that have already broken into this market include coffee, handicrafts, fruits and fish. But there remain a lot more products that are eligible to enter the Chinese market. There-in lays the opportunity.

A concerted effort in trying to improve the quality of Uganda’s exports could see the value of exports earning rise as well as the number of products utilized among the 4,401. Major emphasis could be put in agriculture products especially through value addition and processing.

The other is tourism. The Chinese spending power is on the rise and still presents an opportunity and staying power for Uganda’s tourism industry. As was witnessed during the Shanghai expo, the Chinese are increasingly becoming a coffee drinking nation. Increased marketing campaigns could see an upsurge of the value of Uganda’s coffee exports.

As evidenced by a deepening cooperation in political, economic and cultural areas and by the creation of a new type of strategic partnership based on political equality and mutual trust among others, China and Uganda have enjoyed a long-standing friendship.

It is therefore no wonder that Uganda is looking more and more into ways of gleaning practical economic leadership from China.