By Octave Ngabo
These relations have grown since to considerably that today, China is Uganda’s top source of Foreign direct investments (FDI).
The two nations have signed multiple cooperation agreements, exchanging students, medical teams among others all meant to help Uganda build her human capital.
It is therefore imperative to say that the two countries have excellent relations that are of mutual benefit.
In terms of economic relations, The Forum for China-Africa Cooperation (FOCAC) to which Uganda belongs was established in 2000 following a meeting between eighty African ministers and the Chinese leadership in Beijing.
The forum established a program of cooperation between African countries and China in areas such as investment, financial cooperation, debt relief, and cancellation, agriculture cooperation, natural resources and energy, education, and multilateral cooperation.
This cooperation has been of great developmental impact on Uganda’s economy. Many African countries Uganda inclusive have already enjoyed fruits of this cooperation.
In terms of trade between Uganda and China, the volume has grown and stands at US$558 million and China is Uganda’s largest trading patter. Uganda’s exports to China totalled up to US$39.61 million during 2020 according to the United Nations COMTRADE database on international trade.
The major Ugandan exports to China are mainly agricultural products such as; oilseeds, grains, fruits, spices, coffee, tea, wood, and products of animal origin such as hides and skins.
China provides duty-free, quota-free access to its market to least developed countries including Uganda, and this, therefore, has created an opportunity for Ugandan traders to export to China due to its large market and incentives provided.
This has driven Ugandan exports high hence improving its balance of trade and balance of payment. China is also the second biggest importer to Uganda and in 2020, these imports were valued at US$1.35 billion.
The main imports included mainly electric and electronic equipment, machinery, iron and steel, textiles, chemicals, and plastics.
China is, therefore, a source of highly needed products in Uganda at relatively cheap prices and these products have helped drive up economic development and the importation business from China is a source of employment to many Ugandans as observed by various small-scale traders in many arcades and malls in Ugandan towns.
In terms of manufacturing, many Chinese firms have established several factories and helped the Ugandan government to establish industrial parks such as the Sino Uganda Mbale industrial park, Africa Shandong Industrial Park, and the China-Uganda Agricultural Cooperation Industrial Park.
These industrial parks have helped drive up the level of industrialization in Uganda, hence diversifying Uganda’s economy.
Chinese-owned factories include electronics factories that produce electronic products at cheap prices locally, factories that carry out value addition to agricultural produces hence creating a market for the local farmers, and factories that manufacture timber products.
These factories have created employment opportunities for many Ugandans hence improving their livelihood. These factories have also led to a reduction in imports hence improving the balance of trade for Uganda.
China has emerged as a significant financier of infrastructure projects in Uganda. Most of this financing goes to the transport and the energy sectors and are financed through the China Exim bank.
Examples of these Chinese-funded projects include US$1.4 billion Karuma dam, US$483 million Isimba hydropower dam and the US$350 million construction of the Kampala-Entebbe express highway.
These projects are expected to speed up industrialization in Uganda due to the availability of cheap electric power and improved transport means. These projects have also created jobs for many Ugandans because 85% of the manpower on the projects are Ugandans.
In addition to these projects, many Chinese construction companies are undertaking various infrastructural projects in Uganda; a case in point is the Pearl Engineering Company Ltd.
The China National Offshore Oil Corporation (CNOOC) is overseeing the construction of a pipeline from oilfields in Uganda to Tanga port in Tanzania and this will help to speed up the development of the oil sector in Uganda.
The ICT sector is another sector that has greatly benefitted from Sino-Uganda relations. Two Chinese companies have invested in Uganda’s ICT sector, one of them being Huawei. With the support of the Chinese government, these companies are working with telecommunication companies in Uganda to strengthen the country’s ICT sector.
In the media sector, Star times have got a hold of a reasonable share of the Ugandan market. It provides solutions to digital migration.
China has supported the education sector in Uganda by providing scholarship opportunities to Ugandan students in institutions of higher learning.
These scholarships have enabled knowledge sharing and cultural ties between the two countries. The Chinese embassy has also donated various materials such as computers and other scholastic materials to Ugandan schools.
In addition to this, the Chinese language has been approved as one of the foreign languages in Ugandan secondary schools to be taught and this, together with the setting up of the Confucius Institute at Makerere University has created cultural ties between the two nations.
Thousands of people including women, members of parliament, police officers have participated in training programs organized by the Chinese government in China and Chinese troupes have also visited Uganda and performed. This is a form of people-to-people and cultural exchange.
In the health sector, the Chinese government has funded the construction and equipping of the China-Uganda Friendship Hospital at Naguru. Teams of Chinese doctors have also visited the country and trained Ugandan medical personnel.
The agriculture sector has greatly benefitted from this Sino-Uganda relationship through the training of farmers, a project of the South-South cooperation program, which China and FAO have been collaborating with Uganda.
This has equipped local farmers with skills to improve their agricultural output. Around 3000 farmers have been trained and seven agriculture technology demonstration hubs have been established throughout the country, showcasing effective technologies in horticulture, livestock, cereals, aquaculture, renewable energy, agro machinery, value addition, and sustainable business models.
In conclusion, China has been a great development partner to Uganda in various sectors and through the provision of financial aid in form of loans, grants, and technical assistance.
China tops the list of planned FDI in Uganda and was valued at US$607 million in 2019 and created about 62,876 jobs. The Sino-Uganda relationship has therefore been paramount in Uganda’s economic development and will continue to play a critical role in this development.
Ngabo Octave is a junior researcher at Development Watch Centre, a Foreign Policy Think Tank, and a second-year Pharmacy student at Mbarara University of Science and Technology.