Chinalisation of Uganda is a boomerang ( published in observer) link attached

Increased Chinalisation of Uganda could be a boomerang
http://observer.ug/index.php?option=com_content&view=article&id=27543%3Aincreased-chinalisation-of-uganda-could-boomerang&catid=38%3Abusiness&Itemid=68

Economic ties between China and Africa have grown steadily as reflected in the growing/ increasing aid to Africa in recent years. In the latest official disclosure of China’s aid indicated that it had provided over 6 Billion USD to Africa; however the most official aid considered a state secret.

China and Uganda diplomatic relations date as far back as to when Uganda attained its independence in 1962 and according data released by the American research group AidData, in the decade between 2000 and 2011 China’s aid to Uganda was an enormous $4.67b, slightly more than Uganda’s budget for this financial year.It is envisaged that as much as the subsequent years are not documented, the dialogue between the two countries is an indicator that there is continued aid increase. The aid china provides is mainly in the form of technical assistance, with an emphasis on training in Chinese institutions; grants; interest-free loans; preferential loans that have an interest subsidy; and debt relief. In 2007, a debt cancellation protocol for all debts before 2005 was signed by the two heads of state, which amounted to USD 30 million.  However, since China is not a member of the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD), which reports on members' international aid, it does not provide details about the level and terms of its own aid to other countries—so data and information with regard to types, purposes, conditions, including the extent to which is assistance is tied are rather sketchy.

 

The sectors which have greatly benefited are transport; business related services, manufacturing, health and agriculture whereas telecommunications, mineral exploration has not realized the benefits from the eternal assistance extended by China to Uganda. Government officials reported that some of the aid to Uganda is mostly provided in kind, by Chinese companies, and tends to be on a turnkey basis, mostly with Chinese inputs, including labour. Part of Chinese Aid to the country has taken the form of technical assistance and investment technical assistance in projects of economic and social infrastructure nature such as roads and hospitals; the productive sector, notably agriculture (Kibimba (now Tilda) and Doha rice schemes);construction of the wakawaka Fish landing site now in use and other construction projects, such as government buildings (the Ministry of Foreign Affairs, the $36.3m  construction of the President’s Office), Naguru Hospital and sports national  stadium (Mandela National Stadium).  China has been offering 12 scholarships per year in higher education to Ugandans in mainly five fields engineering, computer science, Medicine, Business administration and food science. China has contributed medical equipment, and medicine to national referral hospital – the anti malaria medicine worth USD 500,000 per annum through Ministry of health.

 

President Museveni has been singing China’s praises his optimism a beam of light when he discusses the long term impact of Chinese investment in Ugandan infrastructure. Chinese continue to be beneficiaries of big infrastructural projects including the contentiously awarded Karuma dam (600MW) and the 51.4km Kampala- Entebbe high way. In president’s speech at the ground breaking for Karuma dam- he intimated that two other Chinese companies, Gezhouba and CWE (China International Water and Electric Corporation) will similarly take on Ayago and Isimba, according to the understanding Uganda reached with the Chinese side.   CNOOC is one of the 3 firms involved in oil exploration in Uganda. Chinese investment in the country is currently worth $596m creating employment opportunities for more than 30,000 Ugandans. In fact, there is fundamentally no sector in Uganda that the Chinese have not invested in or have future plans to invest in. The Chinese are planning to construct a multi-million dollar school that would teach Chinese to local students, in order to broaden trade and cultural ties between the two countries.

 

 China and Uganda trade relations date as far back in the 1960s. China is one of Uganda’s main trading partners. In 2012, 11% of the total imports were from China. In same year, the trade volume between the two countries came to US$575.5 million, among which China's export was US$546.01 million, and import US$29.49 million. This implies Uganda exports 5% of what it imports from China. China's main exports to Uganda are mechanical and electrical appliances, textiles, garments, pharmaceuticals, porcelain and enamel products, and footwear. China's imports from Uganda are coffee and plastics. China strategy is to phase in zero-tariff treatment to 95 percent of the products from the least developed African countries( Uganda inclusive) having diplomatic relations with China, starting with 60 percent of the products in 2010.

 

The president’s eulogy’s of the Chinese withstanding “Chinese lending is also completely free of the usual meddling and high-handedness of some of the friends from outside”, it is also important to note that despite the huge funds sunk in the Uganda sectors and written off debts by china, there still concerns over the huge trade imbalances between Uganda and China. Uganda exports 5% volume of what it imports from China. Also in 2008, china provided USD 120 million concessionary loan to Government’s e government project however the dominant workforce is Chinese. This leaves little room for capacity building, skills training and technology transfer.  Most of china’s Aid is project mode, whose sustainability depends heavily on continuous support from the Chinese Government. Limitation of the technology and skills transfer by Chinese Government leads to questions of sustainability of some of its development assistance. Aid flows from China are not laid out transparently to other donors and development partners, including those that are locally present. This will help not only the affect harmonization of activities but also the integration with economic policies to underpin macroeconomic stability.

 

On the outlook, it seems that the Chinese infrastructure projects in Uganda attract higher unit costs than similar projects in other countries.  The Renaissance dam on the River Nile, which Addis Ababa projects will cost $4.7 billion, will produce 6,000 Megawatts of power(10 times Karuma dam) when fully developed while karuma is projected to cost $2.2billion. Also the cost per kilometre of the  $ 476m four lane Kampala- Entebbe expressway is  $ 1.5m, a kilometre of the six lane  $ 612m Addis Ababa toll motor way will cost 1.3m. All factors constant, on both projects- Uganda will be paying higher than Ethiopia

 

Most of Chinese aid is tied – with at times necessitating Uganda to import from China. Notably significant share of Chinese export to Uganda are substandard. the Ugandan government allows the Chinese Aliens to undercut local Ugandans out of business and allows Chinese capital repatriation to be almost 100%  and at times given tax waivers or exemptions. Issa Sekito, a spokesman for the Kampala City Traders Association has been on record calling for government to place limits on Chinese trading activities in the small and medium enterprise area.

 

There are allegedly also elements of rent-seeking activities between Ugandan and Chinese officials as was the case in Karuma dam procurement. The hydro power dam procurement process was dogged by allegations of impropriety and whistle-blowers’ complaints that culminated in court petitions and the Inspectorate Government (IGG) halting the process citing bribery and corruption in the process. A court injunction halted the process ordering the government to repeat the technical evaluation which led to award of the to a China’s Sinohydro Corporation. The procurement flaws delayed the project for two and half years. Also Chinese companies are able to underbid local contractors for construction work since Chinese construction companies that are subsidized by their government. And it is difficult to get a government subsidy in Uganda. “They not only underbid local companies, but they also import cheap Chinese equipment. So construction companies in Uganda have gone out of business.

 

Although the Chinese have made significant investments in Uganda and continue to make inroads in major infrastructure projects involving roads, railway electrical power and communications, the Ugandan government has not benefited greatly from increased trade with China. The Chinese engagements could be a boomerang and this however,  leaves a hypothetical question on who the beneficiary from the  increased china-lisation of Uganda and needs a closer assessment of the ultimate outcomebearing in mind  the Chinese have historically been xenophobic.  How does China stand to gain from this collaboration? Is it through market creation? Global leadership? Imperialist rivalry? etc especially when many Chinese, in rural China, still live under difficult circumstances.