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Chinese ‘dragon’ on the hunt in Uganda
What you need to know:
In Uganda, China currently holds a major stake across various sectors of the economy including manufacturing, hospitality, and infrastructure with several of its firms undertaking key projects such as the Karuma dam construction
Kampala.
In ancient Chinese folklore the mythical creature, a dragon is believed to have the powers to bring rainfall, hurricanes and even floods. However, it also symbolises good luck, strength, and power. Every year, during the celebration of the Chinese New Year, the dragon is also believed to cleanse the evil that would hurt people in the New Year. There are about nine dragons that are mentioned in Chinese folklore.
When the Chinese move overseas, they move with this culture together with another characteristic, the lamps. Global Paper, a Chinese company that manufactures toilet paper, has two sculptures of dragon heads at the entrance of its factory in Mbalala, Mukono District. At the entrance of several other Chinese companies such as restaurants, the occasional red lamps cannot be missed.
The sun is barely out and in a place called Mbalala, on the Kampala – Jinja highway and a few kilometres from Mukono town, hundreds of people are seen walking. Dominated by women, the people are walking in both directions. They all end up in one gate. It is the home of the Tian Tang group, a Chinese steel and mattress manufacturing company in Uganda. It is right next to Global Paper. The hive of activity in Mbalala is often visible early morning for the day shift and the evening for the night shift. The factory is operational 24 hours a day. At about 9pm, as cars are slowed by the traffic, one would not fail to catch a glimpse of several Chinese nationals buying roadside roasted maize from a vendor who has her charcoal stove near the factory entrance.
Company officials reveal that they employ about 1,000 people and it has become a symbol of Chinese investment in Uganda.
The area has also been named “the Chinese Industrial Park” because of the presence of Chinese companies.
Surge in investment
The rise in China investments in Uganda is an attribute of its growing interest on the African continent. According to the Uganda Investment Authority (UIA) investment abstract for 2014/15, China remains a top origin of Foreign Direct Investment (FDI) to Uganda. In 2014/15, FDI from China alone accounted for 56 per cent of the total investment.
UIA estimates that at least $528m (Shs1.8 trillion) of the total $1.4b (Shs4.7 trillion) in 2014/15 came from Chinese registered companies. This is up from $403m (Shs1.35 trillion) of the total $2b (Shs6.7 trillion) invested in 2013/14. China is not the top source of investment, though.
The bulk of the investments come from the Cayman Islands. That is not the entire story, however. Even the investments from the Cayman Islands originate from China.
“It suffices to note that Cayman Islands’ investment was of Chinese origin,” the UIA report reads.
The trend is beyond industrial developments. In the last five years, three Chinese hotels have opened in Uganda to cater for the large Chinese presence in Uganda. Kololo Courts Hotel is located in the high-end residential area of Kololo. It is not the exact luxurious hotel but is known for its rather affordable rates on their hall for wedding ceremonies. From the elevator to room numbers, one cannot miss the occasional mandarin inscriptions for the Chinese community that doesn’t understand English.
Recently, the Nanjing Hotel opened on the Lugogo Bypass. The Chinese Business Hotel will be opening in Industrial Area, Namuwongo, a Kampala surburb.
The location is rather strange because it is located in an area with warehouses and the absence of residential properties.
Supermarkets, restaurants, and banking are also some of the areas they have made investments in.
According to Prof Philip Kasaija, an international relations lecturer at Makerere University, the presence of China in Uganda can be traced to the long-term ambitions of China on the African continent. “China’s presence in Africa has always been there, it has only just been scaled up,” he says. He said this at a recent dialogue hosted by ACODE.
In 1955 during the Afro-China summit, Prof Kasaija reveals China agreed to three terms.
“The terms were non-interference, respect for sovereignty and equality for mutual benefit,” he says. It is this outlook from China on the continent that makes it attractive for African governments to court China for financing.
“Chinese loans do not come with conditions attached. When we have aid that is condition free, we must take it,” he adds.
His concern, however, is Uganda’s relationship with China is not structured but ad-hoc.
This continues to be shown in the meager exports from Uganda to China at just $86m (Shs289b) whereas imports are estimated at $600m (Shs2 trillion).
Why Uganda?
In an email from the economics department at the Chinese Embassy in Uganda, they revealed that the attraction to Uganda is based on political and economic reasons.
“The political and economic status in Uganda is stable; the investment environment is increasingly improved. The incumbent president and Ugandan government attach importance to the development of infrastructure which gives the Chinese companies many opportunities,” the email reads.
Cumulatively, according to Ambassador Zhao Yali, in the last 15 years alone, investments by Chinese companies in Uganda are worth about $2.2b (Shs7.4 trillion).
“This excludes our involvement in infrastructure projects in Uganda,” he said at the ACODE.
“Currently, the major infrastructure developments in the country are being done by Chinese companies,” he adds.
Karuma Dam, Isimba Dam, the Entebbe – Kampala Expressway and the expansion of the Entebbe International Airport.
The total value of these infrastructure projects is about $2.5b (Shs8.4 trillion).
Ambassador Yali takes pride in China doing these projects.
“To attract investors into Uganda, infrastructure is important. After completion of the airport and road project, the image of Uganda will change as investors will be more confident about this country,” he says.
Another $2b (Shs6.4 trillion) is expected to be approved as a loan from the Exim Bank of China for the construction of the Standard Gauge Railway (SGR). The project will also bring on some Chinese expatriates.
In the oil sector, CNOOC is the only company that holds an oil production licence. These projects come with a host of expatriates that require services including meals, accommodation, and festivals.
Non-interventionist
President Museveni has been praising China for its none-interventionist policy in Uganda’s political. This could not have been more emphasised in Museveni’s speech at the swearing ceremony back in May 2016.
“Those people are also our genuine friends. They have no arrogance. If a man has his own house and he goes in another man’s house … what type of fool are you?” he said.
Not so good
“There is the dumping of substandard and counterfeit goods from China. This undermines trade relations between Uganda and China,” Ms Amelia Kyambadde the Trade minister said at the dialogue organised by Advocates Coalition for Development and Environment (ACODE). She also accuses some of the Chinese of doing businesses that are meant for Ugandans. “We have a problem with some of the Chinese nationals. When they come to Uganda, they engage in petty trade yet they registered as investors. I have personally encountered such incidences,” she adds.
William Street has a collection of small businesses selling products ranging from electronics, mobile phones, DVDs and other accessories. Most of these businesses are run by Ugandans. However, some shops selling shoes are being operated by Chinese nationals.
According to the Chinese Embassy, they are “not very clear” how many Chinese nationals are in the country.
Uganda’s investment relationship with China is one that will continue to expand according to the Uganda Investment Authority (UIA). Even with the concerns over substandard goods, the trouble is that an ad-hoc relationship sometimes results into Ugandan traders opting to buy counterfeit goods from China on one hand. On the other hand, Uganda is also failing to enforce the laws on immigration and standards.
Some other projects:
1. Tororo phosphates project estimated at $240m
2. China-Uganda friendship industrial park in Luweero valued at $220m
3. 2 Chinese companies have also expressed interest in developing the Masaka Industrial Park.
4. Additionally, a research project undertaken by Mr Ramathan Ggoobi, an economics lecturer at Makerere University, reveals that there are up to 22 Chinese-owned farms employing about 2,982 people. Ggoobi says the Chinese have scaled up investment in agriculture with the most popular product commodity being rice.
