• Aug 17, 2021 . 4 min Read
  • China-Uganda Relations: A typical example of development diplomacy

China-Uganda Relations: A typical example of development diplomacy
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@New Vision

By Moshi Israel

Chinese Deputy Director General in charge of Africa, Li Ching once observed that; “your own development is inseparable from other’s development, this is what makes China want to continue supporting her allies in development.”

The above statement can be attributed to China-Africa relations which in many ways has propelled both social and economic development of many African countries Uganda inclusive. This kind of relations has seen countries that enjoy diplomacy with China mutually gain from the relations in the aspect of development as the parties use their diplomatic ties to advance the social and political development of their countries and hence, development diplomacy.

While some analysts argue that China’s economic engagement in Africa is sparked by Beijing’s increasing demand for raw materials and market for its products, it is intellectual dishonesty one to claim that African countries benefit from the engagement are less. Whether the argument for Beijing’s need for raw materials is true or otherwise, the fact is that China’s economic engagement with African countries has by far led to positive contributions, especially in an economic and social context. Therefore, Uganda and other African countries rising consumer middle class has propelled the two countries into a symbiotic trade partnership which in all ways is of mutual benefit.

In the infrastructure sector, China has supported Uganda’s efforts in improving this very important sector. By supporting Uganda’s infrastructure, a sector that is important for economic growth, in China in long run supports the country’s social and economic development.  Also, according to the Economic Policy Research Centre (EPRC), China established the Wakawaka fish landing site. Today, this fish farming project contributes to the growth of Uganda's fishing industry, a sector that is one of Uganda’s top foreign exchange earners, hence, supporting the country's economic development.

China has also supported the Uganda government’s efforts meant to expand the country's information technology sector and e-government. China's Export-Import Bank extended a $106 million loan to Uganda Huawei Technologies which is leading the project that entails constructing fibre optic lines across the country. The majority of government agencies, schools, universities, and hospitals are now online, and the cost of internet bandwidth continues to fall. Chinese government has also on different occasions donated ICT equipment to several government ministries. According to a May 2020 Ministry of ICT report, ICT services grew at a 14.8 percent annual rate from 2014 to 2019, and the sector contributed 3.1 percent to GDP. It also contributes significantly to national revenue. Arguably, one can argue that it is through Chinese support that the country achieved this goal.

In the energy sector, China has played a pivotal role in supporting Uganda’s energy sector which has seen the country underrating several mega projects such as the construction of Isimba and Karuma hydropower dams. These projects have already helped the country raise power supply producing 183 and 600 MW respectively. Both projects were funded with Chinese loans at a fixed annual interest rate of just 2%. According to a 2019 IMF report, for African countries to attain steady economic growth, African countries including Uganda should increase their investments in the energy sector since it is a catalyst for development.   Therefore, such support cannot b underestimated as it will boost the country’s economic performance.

Further, as a result of China’s good relations with Uganda, Chinese investors are heavily investing in Uganda’s economy a development that has made China one of Uganda’s top source of foreign direct investments.

A 2017 study on China-Uganda relations, revealed that both state-owned and private Chinese companies have invested heavily in Uganda which creates a high turnover and thus pays taxes into the economy, and also employ Uganda’s huge percentage of Ugandans (over 60% of Ugandans in the bulk of enterprises), which means that Ugandans have greater job prospects. Companies also contribute to the economy by acquiring raw materials from local suppliers, particularly in the construction and manufacturing industries.

In conclusion, China-Uganda relations are so beneficial to both countries and have resulted in significant contributions to Uganda's economic development through FDI and Aid in the form of loans and grants to fund projects that will propel Uganda into the middle-income category. Uganda’s projects supported by China such as; the Entebbe express highway, the Karuma and Isimba hydropower dams, and other projects have significantly enhanced Uganda's transport sector, energy and industrial sectors respectively. The Wakawaka fishing site support has improved the country’s agricultural industry, while financial support for the ICT sector is helping Uganda's economy modernize quickly.

By training the Ugandan labour force, human capital which is vital for economic take-off, China has accelerated Uganda’s match toward growth. Chinese businesses and companies in Uganda are helping to create and provide employment opportunities which in long run helps to broaden the tax base, and facilitate the transfer of technology and knowledge which all are essential for any country to attain social and economic development.

With all the above in mind, it is one can conclude that China-Uganda relations has played a significant role not just in diplomatic context but also social and economic development of Uganda.

The writer is a junior research fellow at Development Watch Centre, a Foreign Policy Think Tank and a graduate of International Relations and Diplomacy

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