Business
Highlights of China-Uganda relations
Publish Date: Mar 05, 2014
Highlights of China-Uganda relations
Entebbe Highway is being constructed with the help of the Chinese government
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By Patrick Jaramogi

Since Uganda gained her independence in 1962 (51 years ago), China has continued to be a leading supplier of household items to every Ugandans’ home. Patrick Jaramogi explores how Ugandan;s are coping with the influx of Chinese products and investments in Uganda.

Highlights of China-Uganda Relations (1962-2014)

China became one of the first countries to sign a joint communiqué to set up a diplomatic mission in Uganda.

Since then, both countries have been maintaining cordial political relations despite the changes of internal and external situations. The exchanges of visits at the highest level have been maintained. And the mutual visits at the cabinet and other levels are very frequent. These visits have further enhanced the mutual understanding and friendly cooperation between the two countries.

Economic Cooperation

China continues to be one of Uganda’s leading trading partners. According to statistics from the Ministry of Trade, In 2012, the trade volume between the two countries came to $575.5 million, of which China’s exports were $546.01 million, and imports $29.49 million. This indicated that Uganda exports five per cent worth of what it imports from China.

China has made this possible by employing a strategy that emphasizes a zero-tariff treatment to 95 percent of the products from the least developed African countries having diplomatic relations with China. The bilateral trade started soon after the establishment of the diplomatic relations.

Though most of the Chinese aid is tied at times necessitating Uganda to import from China for some Chinese-funded project loans, most of China’s aid is project-based, with sustainability depending heavily on continuous support from the Chinese government.
 
Investments

 
The Chinese government has made significant investments in Uganda mainly in the areas of infrastructural development such as road construction, hospitals, railway, electrical power and communications development.

China imports leather, coffee, fish and food products from Uganda and exports light industry products, farm tools, textiles, pharmaceutical products, garments, ceramics to Uganda.

Economic ties between China and Africa have grown steadily as reflected in the increasing aid to Africa in recent years. The latest official disclosure of China's aid indicated that it had provided over US$7 billion to Africa. Trade between Africa and China as of 2012 stood at US$200 billion from US$9 billion just 10 years ago.

According to data released by the American research group; (AidData), in the decade between 2000 and 2011 China's aid to Uganda was an enormous US$4.67 billion.

Project Assistance

For decades, the Chinese Government has continued to provide project aid to Uganda in forms of interest-free loans and grants to construct some of those projects which are at the best need of Uganda.

Some of the notable Chinese projects include the Wakawaka Fish landing site, Kibimba (now Tilda) and Doho rice schemes, government buildings such as the Ministry of Foreign Affairs, the US$36.3 million President's Office, Naguru Hospital and the Mandela National Stadium at Nambole.

The Government of Uganda has in return, reciprocated by offering China projects such as the construction of the 600MW Karuma Hydropower Dam and the 51.4km Kampala- Entebbe Express High way.

Mandela Stadium at Namboole


Uganda has continued to shine in the sports arena due to Namboole. Completed in 1996 after three years of construction, the 40,000 capacity stadium has signaled the relationship and support from China. The facility also has a 120 bed hotel, two outdoor tennis courts, two volley ball training grounds, two basketball training grounds and a football training ground.

For 16 years, the Chinese Government has been sending experts to the stadium to train the local technicians, maintain the facilities, and provide technical support.

Kibimba Rice Scheme


Joseph Mukholi a rice farmer in Bugiri can never hide his excitement following the revamping of Kibimba rice scheme with a Chinese grant. “With a total area of 1721 acres, the construction that was handed over to the Uganda Government in 1982 with complete sets of rice processing equipments has made rice processing easy due to modern rice hulling mills,” said Mukholi.

Kibimba is the largest of the rice schemes in the Uganda supplying the bulk of the rice needed in the country. It has also provided numerous employment opportunities to residents from surrounding districts.

He says with the capacity of handling over 40 tons per day, rice farming has enabled residents of Bugiri lead a comfortable life. The Kibimba (Tilda Rice) , Doho, and Buniaoli rice schemes have not only promoted the diversity of Uganda's agriculture and enriched the food variety of the people, but also made Uganda one of the important rice producers in Africa.

Bamboo project at the Uganda Industrial Research Institute


For several years thebagisu from Mbale and the slopes of Mountain Elgon have enjoyed Kamalea (bamboo shoots) as a nice delicacy sauce. But new innovations (emerging from China) indicate that Kamalea is not just food but has a wide range of use.

New Vision has established that Uganda will soon stop the importation of toothpicks from China, one of the products of bamboo. A team of Chinese officials from the China National Bamboo Research Center (CBRC) are currently in the country to collaborate with government of Uganda to set up bamboo satellite villages.

Environment State Minister Flavia Munaaba who led a team of technicians to China last year to learn the intricacies of the modern technology said bamboo would cease being a waste. “For years we have only eaten the sheath of bamboo (kamalea) and made rudimentary hand crafts but after we visited China we learnt a lot and that is why this team is here to help us boost this technology,” she said at the sidelines of the visit by the Chinese team to Uganda Industrial Research Institute UIRI on Monday.

Munaaba told New Vision that the Chinese had donated a tooth picking plant to UIRI for manufacture of toothpicks. “The plant is here all that we need is for an interested party to come and get started because UIRI is at the moment making test samples,” she said.

She said from uses of bamboo range from edible bamboo shoots to construction, medicine, bamboo fabric or biofuel. “For the past 10 years, bamboo experts have been experimenting with the multiple uses of bamboo. Bamboo fiber for the garment and automotive industries, and flooring boards.

Munaaba said bamboo panels, especially floors, are in demand all over the world, because they have the texture of marble and the elegance of wood.

“Bamboo products are strong, durable, smooth, clean, and resistant to humidity. As government we have already partnered with the Chinese government to manufacture these hear because we have the raw materials,” she said.

The UIRI Bamboo project office Julius Turyamwijukya said they have since they returned from China made 5 million toothpicks using local bamboo. “Another plant is in Kabale because it is near the bamboo forest in Kisoro. All we need now is an entrepreneur to inject in money for buying raw materials and use the plant at UIRI,” said Turyamwijukya.

 David Ebong the National Forest Authority Board chair, the government body set to spearhead the bamboo satellite villages said the Chinese have earmarked $10 million (shs245b) for putting up bamboo value addition plants across the country.

“Apart from being eaten as food, bamboo is used in China for making furniture, utensils (chopsticks), paper, curtains, mats, shirts, musical instruments and décor,” he said.

He said UIRI had so far made over 1000 meters of mat from bamboo. “With the funds, medicine extracted from bamboo will be manufactured here and exported,” said Ebong. Liquids from bamboo can be used to treat infections due to its important nutrients.

Biogas Projects According to the Protocol on Economic and Technical Cooperation between China and Uganda in 1985, the Chinese side sent experts to Uganda and constructed 7 pilot biogas projects in Mbale and Tororo Districts. The Chinese side constructed another 20 biogas projects in Kampala, Entebbe etc. in 2000. These projects at this regard have helped Uganda to diversify her energy utilization and protect the environment.

Health Cooperation


Amongst the notable ones is the China Uganda Friendship Hospital –Naguru (CUFH-N) formerly KCC hospital Naguru that was renovated with a Chinese grant.  But the bilateral cooperation in the area of health traces way back to the 1960s. according to the bilateral agreement, the Chinese Government has been sending medical teams to Uganda since 1983.

Over 20 teams and about 140 doctors have been sent to work in Uganda mainly in Jinja Hospital at the Chinese expenses. The Chinese Government has been providing medicine for free to patients.

Several successively open surgeries, in the areas of internal, orthopaedics, urological, otolaryngological, acupuncture, paediatrics, stomatological, ophthalmology, anaesthetic, neurosurgery, plastic surgery and gynaecology  have been carried out under the health cooperation.

The Naguru health facility has been fully equipped with medical equipment from China.
 

Energy- Karuma Power dam

According to the Chinese Enterprise Chamber of Commerce in Uganda, the Chinese investments in the country were worth US$596 million as of February 2013 creating employment opportunities for more than 30,000 Ugandans. With the construction of the 600MW power dam in Karuma, power outages is expected to reduce with increased power supply to mainly north and north-eastern Uganda.

Other Chinese companies, Gezhouba and CWE (China International Water and Electric Corporation) have been named to construct the Ayago and Isimba, mini hydro dams.

Entebbe Express Highway

Expected to be completed in three years’ time, the construction of the four-lane dual carriage Kampala-Entebbe superhighway directly linking Kampala to Entebbe Airport is set to boost trade and tourism.

The $476million (Shs1.19 trillion) co-financed by the Exim Bank of China and the Government of Uganda, is the largest grant from the Chinese government to Uganda geared towards promoting trade and industry.  While commissioning the road, President Museveni said the highway will go a long way in decongesting the Kampala-Entebbe highway.

The Chinese loan amounting to $350 million (shs875bn) is repayable over a period of forty years at a 2% interest per annum with the Uganda government contributing $126 million (shs315 bn) and shs100 billion as a compensation.  The 51km highway will be linked to Munyonyo.

Works minister Eng. Andrew Byandala told New Vision the road will boost speed movement and transit to the airport. “The construction works includes 15 overpass bridges, 15 underpass bridges, and three interchanges at Abayita Ababiri, Busega and Kajjansi along the Entebbe highway,” he said.

Uganda National Roads Authority’s (UNRA) Dan Alinange says so far the construction is on course. He noted that compensation was almost complete.  “We started the compensation process in March 2012. Only the amount determined at the time of valuation will be compensated,” he said.

Alinange pointed out that compensation is being done basing on the market value at the time of valuation.
The construction works are being carried out by the China Communication Construction Company (CCCC) which was won the contract awarded by the UNRA.

Dealing with local Banks


New Vision has established that China has continued to support Uganda due to its toughness on graft. The Chinese government grants are closely monitored and supervised by leading Chinese expatriates.  With leading funds coming from the Exim Bank of China, local banks that channel these funds have a desk for a Chinese expatriate. “These people are so tough with their money. We handle huge sums of their grants but on condition that we create a desk for one of them to sit and monitor the cash flows in the bank,:” said a senior manager from a leading local bank.

The officer who preferred to remain anonymous for fear of being reprimanded noted that as a bank, they were comfortable with the arrangement. ‘For us as a bank we have no problem with that because we also benefit when funds flow through our account,” he said.

New reports of the Chinese government’s commitment corroborate this information especially regarding funding from the Exim Bank of China.

(This story was done with support from the China- Africa Grant Reporting project managed by the Journalist Department of the University of Witwatersrand South Africa).

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