Tag: Economic Growth

Uganda, China is Here; Let Economic Revolution Begin!

Posted on by Shemei Ndawula

Recently, at my weekly book club meeting at FEMRITE Bukoto, I met a white foreign policy enthusiast, Tobias. Introducing myself as a fellow of Ugandan and Regional think tank Development Watch Center, he excitedly invited me to share coffee with him at a popular restaurant along Acacia Avenue popular with foreign tourists and Ugandan elites. “They now have ChinaToday” he gleefully revealed. I stared back at him with an unmistakably perplexed expression on my face. A little confused, he asked “you know China Today, right?” And I fumbled with words for the next few seconds as I tried to explain to him how surprised I was that someone with a hazy Australian/ British accent would walk up to me to discuss China Today. With every passing month of the past decade, it’s becoming more and more clear that China is finally here.

The phenomenon that is China’s rising cooperation in the African continent is often treated with suspicion and mistrust especially because China in many ways has revolutionized the way world powers associate with Africa. Previously, Africa was postured as a perpetual backland of underdeveloped, under privileged, uneducated and uncivilized communities. This is why most of the previous foreign interventions have been geared towards crisis mitigation and not capacity building. It is said that at the turn of the past century, the erstwhile great Ottoman Empire was described as the “Sick man of Europe”, one can argue that by the end of the previous century Africa was successfully postured as “the sick man of the world”. Indeed, on 13th May 2000, United Kingdom’s The Economist branded Africa “The Hopeless Continent.” Yes, UK’s major New Paper baptized entire African continent “Hopeless.”

And that is why, over the last decade Africa has seen its partnership with China deepen significantly. This is because the People’s Republic of China does not necessarily always come in as a crisis mitigation crusader (although they were valuable allies in the recent COVID-19 pandemic and similar) but as a partner in capacity building. Having made so much progress with its own economy and social welfare over the past three decades, China is perhaps the most qualified among the biggest world economic powers to advance to Africa experience-based insight because these are changes that have happened within our lifetime and prove that any nation, through sheer social cohesion and visionary leadership can transform its fortune and rise on the global stage. In many ways we are following in their footsteps, China walked so that Africa can run.

A brilliant example of this is the green nuclear power plant that is in advanced planning stages to be set up in Buyende (about 150 kilometers North of Kampala Capital City).  The plant which is projected to commence operations by 2031 will add a whopping 2000 megawatts to the national electricity grid which currently stands at 1500 megawatts. This will spur the further industrialization of Uganda attracting more Foreign Direct Investment within the country as well as valuable jobs for the local population. Additionally, this green renewable energy will cut down on the carbon footprint of many industries and manufacturing plants who can then export their products all over the world without need to pay for the carbon credits for environmental pollution, nuclear energy is practically carbon free making it one of the most environmentally friendly means of power generation.

Previously, prior attempts to invest in and set up nuclear energy facilities in Uganda and elsewhere on the continent have been subject to harsh criticism especially by western powers who view Africans either as harboring undisclosed desire to produce nuclear weapons or simply too ignorant to run the facilities effectively. Not only are these assumptions baseless but they are also quite ironic considering where they’re coming from. As the world positions itself in the march from fossil fuels, the only way African countries can ever hope for a chance at energy self reliance is by exploring all the best available options instead of the previous energy apartheid where only the most powerful and privileged countries were allowed access to nuclear technology. Given China’s stellar track record especially in nuclear research and its willingness to train the natives and share its technology, Uganda can get worthwhile value from its rich Uranium natural deposits instead of simply peddling the mineral for sale on the world market. This development is a major step in the right direction of Uganda becoming a continental manufacturing hub within the next decades.

What makes the Chinese multilateral development and diplomatic strategy an astounding success when it comes to Africa relations is the ability of China to develop broad based development and capacity building initiatives. In Uganda, right on the heels of the declaration of the intention to build the Buyende Nuclear power plant is the reveal of a proposed Uganda-China industrial park to be setup in Tororo and projected to create over 100,000 jobs. To connect all these the Chinese Exim bank as well as the government of China will be funding the Construction of the Standard Gauge Railway from Mombasa to Kampala. This broad-based strategy if implemented well can spark an economic revolution that places Uganda and the greater East African region in the vanguard of the economic and technological rising of Africa.

Shemei Ndawula, is a Senior Research Fellow, Development Watch Centre

Africa: The world’s Fastest growing Continent but home to 90% of World’s Poorest?

Posted on by Admin

Ssemanda Allawi

Africa was for so long seen by some as a dark continent or a hopeless continent as the Economist once put it.
However, in the last two decades, the image of Africa has been improving with experts and economists predicting the continent is on verge of take-off which has made the continent the great hope of the world with the world bank arguing that; “Africa could be on the brink of an economic-take off, much like China was 30 years ago.”

Analysts argues that in recent years, Africa’s growth has been impressive despite economic hardships in some different parts of the world. Indeed, Economist later updated Africa’s status from “the hopeless continent” to “Africa rising .”
Analysis predict that African countries will continue with better economic performance than most of other regions – with the continent maintaining 7 of the world’s ten fastest growing economies in 2020.

In their five years foresight report for Africa (2020-2025), Brookings Institution predictions indicate greater performance for African countries with Senegal topping the list at 8.3%, Rwanda 7.9%, and Niger at 7.3%. Uganda is listed in 4th position with its economy expected to grow by 7.2% while Mozambique is in 5th position with its economy projected to grow by 6.9%.

For the year 2020 alone, International Monitory Fund projections indicate that African small economies will perform higher than the continents giants with South Sudan’s economy projected to grow by 8.2%, Rwanda 8.1%, Côte d’Ivoire at 7.3%, Ethiopia 7.2% while Senegal will grow at 6.8%. Benin will see its economy in 2020 grow by 67%, Uganda 6.2% while Kenya, Mozambique, Niger and Burkina Faso are all expected to perform at 6%.

Whereas these countries projection present a promising story and contribute total average economic growth rate projection to about 3.8%, (which is about 3.6% for sub-Saharan Africa) it is important to note that these averages are weighed down closer to the global average which is 3.4% by two of Africa’s largest economies; Nigeria and South Africa at 2.5% and 1.1% respectively.
As population stagnate or decrease in Europe, China, Japan and other western countries, Africa’s population of 1.2 billion is projected to double by 2050. More people mean more consumption, more production and consequently more growth. Some African countries economies grew on average at about 6% in the year 2019. That is almost times three of United States of America’s rate and of course higher than many other countries.

Such figures only paint a bright future for Africa. Many of African countries are becoming more liberal in terms of economy while many are registering positive other aspects such as democracy. That notwithstanding, there are some challenges ahead the continent must address.
In 2019, the world bank indicated that Africa may become home to more than 90% of the world’s poor by 2030 citing African governments little fiscal space to invest in poverty-reduction programs as one of the reasons.

This means that African countries are faced with a challenge of low productivity. True, African countries maybe growing now, but the question is for how long. Many are dependent on commodities that more than a half of Africa’s export falls in minerals. Arguably, this makes the continent’s economy very much vulnerable according to fluctuations in global demand. In addition to that, more than two thirds of Africa’s labour force is employed in agriculture – which is predominantly substance farming. It is also important to note that manufacturing which is key for developed economies has not improved well that its total GDP is not different from that of 1970s.

World Bank, IMF and indeed African Development Bank argue that; a one percent point fall in GDP of OECD member countries to Africa’s export rate earnings decline dropping by 10%. Indeed, at height of U.S-China trade war, in June last year, the World Bank revised Africa’s economic growth projection from 3.3% to 2.8%. With China’s official announcement on 17th January 2020 that second largest economy expanded by 6.1% in 2019 from the year before – the worst figure in 29 years , an argument can be made that since China is Africa’s largest trading partner and Foreign Exchange source, the continent may face some shortfalls in their projections.
Such challenges with growing corruption cases in some African countries with a weak private sector which is more in bed with governments for favours, projections for Africa’s bright future may remain unrealised. Unemployment amongst youth is so high – a recipe for future crisis. The recent xenophobic attacks in South Africa offer a good example that unemployment can drive people crazy. There is no doubt Africa has a great potential for economic take off, but this to be translated into something tangible for their people there is need for political willingness to come up with bold reforms, like trade, governance and ensure transparency and fight corruption. It can be argued that the biggest issue we should watch is how the continent will deal with its most valuable resource; not minerals, not oil but people.

A graduate youth in South Africa looking for jobs on streets. Courtesy photo.
A graduate youth in South Africa looking for jobs on streets. Courtesy photo.

 

It is projected that Africa’s share of the world’s population will rise from 1/7th to about 1/5th by the middle of this century. Arguably, if African governments ensure that their people have access to good education, good health care, good governance, and employment opportunities, there will be no one to stop the continent from becoming a power house. Short of this, African governments better worry of their population increase, it will not be a blessing but a created curse.
Yes, African external assistance is important for the continent but what is more important is not aide but important African generated or internal reforms.

Twitter @SsemandaAllawi.