Last week, President Yoweri Museveni announced that China has agreed it’s largest ever investment in Uganda.
The state-owned Sinohydro Corporation has been contracted to construct a $1.4 billion Karuma Hydro Power Plant in the mid-western Ugandan district of Kiryandongo.
This is the latest in Chinese firms to have been awarded contracts to construct roads and buildings in the capital Kampala – including the country’s first ever $350 million expressway linking Kampala to Entebbe International Airport. Uganda’s exports to China also receive preferential treatment.
Uganda is currently funding 85 percent of its national budget and the rest is from foreign aid, which is a better ratio than many of its African neighbors.
According to Museveni, “Our Chinese friends also have, not only the technical capacity, but financial capacity as well on favourable terms.
Chinese lending is also completely free of the usual meddling and high-handedness of some of the friends from outside. They also focus on the primary sectors of the economy such as infrastructure instead of focusing on secondary sectors of national life.”
Uganda’s finance minister Maria Kiwanuka claimed “there is no evil in accessing Chinese money,” claiming that in China, Uganda and Africa at large have found a true partner.
“Their interest is in getting a long-time development partner right in the heart of Africa,” she said, noting that China’s loans have low interest rates and a long payback period.
But some analysts are concerned that the relationship is going too far and too deep, and that if the Chinese are providing so much in the form of loans, the Ugandan government will have little incentive to improve tax collection and public services.