By Francis Ndamaje
China and Uganda share a rich historical background of diplomacy and economic relations. The two countries established diplomatic relations in 1962 which subsequently paved way for trade and economic relations.
Bilateral relations between Uganda and China entered a new stage of development in 1986 with bilateral cooperation expanding and mutual high-level exchanges increasing. In both 1996 and 1997, Uganda backed China at the UN Human Rights Commission. In 2000, Uganda also supported the bill put forward by China on the maintaining and observing of the Anti-Ballistic Missile Treaty in the UN.
With the expectation of considerable revenue in the future from the exploitation of the oil reserves in Uganda’s Albertine region, there has been a growing demand for the construction of public infrastructure in Uganda which requires substantial financing.
To meet her infrastructural needs, Uganda needs to invest an estimate of $1.4 billion annually.
China has played a significant role in this sector of improving Uganda’s infrastructure sector.
To maximise tourism revenues and facilitate business travels, Uganda embarked on a dual project to expand Entebbe Airport’s capacity and improve connectivity between Kampala and the airport to keep up with the air traffic.
Uganda, as a member of the Chinese Belt and Road Initiative, has benefited from the Chinese fair and conducive infrastructural financing agreements to low developed countries. China, through EXIM Bank extended a loan of up to $ 670 million which has seen the completion of the Kampala-Entebbe Expressway and the completion of the first phase of the airport expansion.
The successful completion of these infrastructural projects eases mobility and facilitates cross-border travels of tourists and transportation of commercial goods which in turn grows the country’s revenues and accelerates economic development.
Furthermore, the Sino-Uganda relationship has equally facilitated expansion of Uganda’s electricity supply. China has been involved in the construction and funding of two large dams at Karuma and Isimba.
The increased power supply fits within Ugandan government targets that by 2040, industrialisation should contribute 31% of the GDP and employing 26% of labour force and contributing 50% of exports as manufactured goods.
Notwithstanding, China’s very low interest and long term loans extended to Uganda to boost economic growth through infrastructural development, in terms of industrialisation and Foreign Direct Investment, China is a key player in Uganda’s economic development.
In the 2018/19 financial year, Uganda Investment Authority performance report ranked China a top Foreign Direct Investor in 2018 with a total investment worth $607 million comprising 45.1 % of the total investment. During the same period 75.4% of the jobs created were attributed to foreign owned projects.
China is also Uganda’s second largest trading partner with the total exports and imports between countries totalling to over $940 million annually. These trade and economic relations have significantly raised domestic revenues for Uganda to a whopping 76.4% to the national budget.
In conclusion, all the above points at China’s contribution towards Uganda’s economic development from infrastructure development, to manufacturing and industrialisation, Agriculture and foreign direct investments among others.
The author is the board chairman, Isimba Community Hub