China-Uganda friendship: A partnership driving economic growth and prosperity

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OPINION

By Nnanda Kizito Sseruwagi

China’s relationship with Uganda has played an inextricable role in developing our country into one of East and Central Africa’s major manufacturing hubs.

Thanks to China’s commitment to invest in Uganda’s industrialisation, our manufacturing capacity now spans several sectors, from electronics to textiles, ceramics to steel, and more – all fuelled by factories and industrial parks set up with the support of Chinese capital and expertise.

These industries have created jobs for Uganda’s burgeoning youth demographic, reduced the country’s import dependency, and fostered economic growth.

We now have over 50,000 factories employing more than 1.4 million Ugandans, with tens of thousands of workers in Chinese-founded industries, such as Liao Shen and the Sino-Uganda Mbale industrial park.

The bilateral trade between China and Uganda has also been growing by leaps and bounds over the years, with the balance of trade also steadily improving.

The Observatory of Economic Complexity (OEC) analysed the dynamics of economic activities between Uganda and China in the last 28 years and established that the exports of Uganda to China have increased at an annualised rate of 25.6%, from $115,000 in 1995 to $54 million in 2022.

Additionally, in December 2023, China exported $116 million and imported $5.75 million from Uganda, making a positive trade balance of $110 million. This gradual increase in our exports to China over time is the first promise of a better trade relationship between us, but there is more.

We also cannot overlook the significant influence of the launch of the Belt and Road Initiative (BRI) by President Xi Jinping in 2013 on Uganda’s economic growth and infrastructural transformation. 

The BRI is aligned towards enhancing global trade and infrastructure. What spells BRI in Uganda is practically a mega infrastructure project, such as the Entebbe Express Highway, and the sprouting of hundreds of standalone factories and many industrial parks spread across different regions of the country.

This has contributed to the expansion of our manufacturing sector, which consequently led to the share of manufacturing to GDP growing from 6.7% in 2000 to 16.5% by 2024, as per the Uganda Bureau of Statistics.

The broader industrial sector now contributes even more, 27.4%. About 40,000 Ugandans are directly employed in diverse Chinese enterprises, playing an instrumental role in the country’s economic growth.

Industrial parks such as the China-Uganda Liaoshen Industrial Park in Kapeeka, Nakaseke District, have been fundamental in Uganda’s economic transformation.

The park’s parent company, Zhang Group, has existed in Uganda for over 20 years, and it brings together several enterprises, including Hash Security, Airang Hotels and Restaurants, Smartec Hisense products and the Liao-Shen industrial park. It has invested over $400 million in the park and created employment for tens of thousands of people.

In the Namanve Industrial Park are ENGO Holdings Limited and SIMI Technologies. These were the first electronics manufacturing plants in Uganda, both spearheaded by Chinese investors. Among the products produced there are mobile phones (feature phones and smartphones), laptops, tablets, chargers, USB cables, earphones, etc. These plants can manufacture about 2,000 feature phones, 1,500 smartphones, and 800 laptops daily, among other products.

Although currently these plants have to import some Chinese components, the long-term goal is to have full-scale commercial production employing trained local workers.

With time, Uganda shall drastically reduce its reliance on imported electronics by producing enough to meet local demands, including the production of a million computers annually.

Additionally, one of the leading factories manufacturing plastic products and packaging materials for beverages, processed goods, medicines, oils and pesticides is Heng Shang Plastics (Bugolobi, Kampala).

This company has contributed to import substitution and improved supply chains since the factory is local, yet many of these goods were previously obtained from China.

Looking specifically at employment, today, more than 500 workers are employed in Unisteel Investment Uganda Limited, a Chinese-backed steel production industry established with a $100 million investment in 2024.

Steel manufacturing plays a critical role as the cornerstone of the industry and construction sectors, something very important for Uganda’s development projects.

In the Sino-Uganda Mbale Industrial Park, we have over 40 companies doing important work such as assembling smartphones, televisions, weaving textiles, and rolling steel. These companies employ around 10,000 workers daily.

These factories/companies are strategically located in Mbale, which is Uganda’s third largest city, and home to millions of people who provide both labour and markets. Being a border city, its location also has the advantages of a well-developed transport network and complete infrastructure. The goods from the factories there can be distributed easily to countries of East Africa, North and South Africa, the Middle East and West Asia.

Through the China-Uganda South-South Cooperation Phase II, Uganda’s food production has been immensely boosted, and the livelihoods of farmers have improved.

The Government of Uganda identified limited knowledge and skills, trade and investment as the main constraints to its agricultural development and food security, which adversely affected the food and nutrition security and livelihoods of over 70 percent of its population.

Since 2015, Uganda, China and the Food and Agriculture Organisation (FAO) have worked together to support Ugandan small-scale farmers in boosting their production through sustainable technologies, under the FAO-China South-South Cooperation (SSC) Programme.

The project has scaled up priorities in developing crop, horticulture, livestock and aquaculture production, as well as introducing new technologies, including renewable energy, agromachinery and improved water harvesting and irrigation methods. China and FAO invested $12m (sh44b) in this project, benefiting more than 9000 farmers.

Additionally, China’s agricultural partnership with Uganda can be appreciated through projects like the Kibimba and Doho rice schemes. In the Butaleja district, local farmers attest to benefiting from hybrid rice farming.

China is also a major actor in the transformation of Uganda’s energy sector. It has built the Karuma and Isimba dams, which are key hydropower stations for the electrification of our country. In February 2022, CNOOC (China National Offshore Oil Cooperation) became the largest Chinese investment in Uganda with over $4.7 billion. Since then, it has been vigorously participating in helping Uganda establish a sound oil industry system, aiming to create more than 20,000 jobs for Ugandans.

China and Uganda also maintain increasing people-to-people exchanges in the fields of health, education and human resources. For instance, since 1983, China has sent 209 medical experts to Uganda and provided free treatment to millions of Ugandans. On the frontier of education, China has, over the years, provided hundreds of degree scholarships and over 5,000 tailor-made training courses to Ugandans in areas of agriculture, medical care, public administration, computer science and infrastructure, among others.

The significance of Uganda’s friendship with China cannot be overstated. This is a relationship we should maintain and promote, because it is to our mutual benefit.

Senior Research Fellow, Development Watch Center, Uganda.