As President Yoweri Museveni arrives in China today, the Asian nation’s aggressive investments in Uganda has exponentially reached USD$ 561m and her companies earned a staggering $ 8.6bn profit in the last 20 years.
Museveni and his team are scheduled to sign six new bilateral contracts with Chinese President Xi Xinping according to official statements from State House Uganda.
“President Museveni is expected to arrive in China today (Monday) on a four-day working visit on invitation of the Chinese state authorities. He (Museveni) will hold bilateral talks with his host, President Xi Xinping at the Great Hall of the People, in Beijing and witness signing of six agreements between their countries,” said a brief statement from Senior Presidential Press Secretary, Don Wanyama.
China Africa Research Initiative data shows that China’s annual Foreign Direct Investments in Uganda increased from USD$ 9.9m to USD$ 79.04m in 2017 and is still snowballing.
Exim Bank China has since 2002 advanced Uganda loan of about USD$ 3bn to finance public infrastructure projects in communications, energy, roads and most recently metropolitan security.
In 2018, Minister of Finance, Planning and Economic Development, Matia Kasaija wrote a confidential letter to President Museveni expressing discontentment with the “unfair” conditions Chinese are advancing for their loans.
The letter revealed that Uganda has already been arm twisted to open an escrow account in Bank of Uganda and deposited a colossal Shs 150bn meant to guarantee security of Chinese loans.
The escrow account as of mid-2018 was already effecting terms 5 agreements including; Karuma Hydropower Dam (USD$ 17.6M), Kampala-Entebbe Airport Expressway UDS$ 7m, National Backbone & E-Government Phase III USD$ 311,000 and Isimba Hydropower Project USD $9.7m.
Ministry of Finance Permanent Secretary and also Secretary to the Treasury, Keith Muhakanizi told ChimpReports on Monday that they want the policy to be reviewed and Museveni is expected to bring this up to his host.
“The escrow account opened in Bank of Uganda was a condition given to us by the Chinese as a prerequisite for their loans,” said Muhakinizi.
Uganda, he said, was desperate and had limited options hence settling for an economically undesirable conditions.
“We were desperate with only one option but now we have other bilateral options. The policy should be reviewed and that is what we have told the president (Museveni),” added Muhakanizi without naming the new countries willing to give Uganda loans.
Muhakanizi did not reveal to ChimpReports the amount of money currently in the escrow account and instead referred us to the Accountant General, Lawrence Semakula. Semakula did not pick our repetitive calls seeking for comments.
Ministry of Finance officials are also not happy with the Chinese insistence that all projects financed by their loans should only get technology, goods and services from China. The monies on the escrow account are expected to grow until the loans are fully paid in about a decade.
When contacted on phone, Economic Consultant, Prof. Augustus Nuwagaba said the projects being financed by China don’t demystify development since accruing benefits largely go to China.
“Keeping money in hundreds of billions redundant in an escrow account is not good for our growing economy,” he added.
Nuwagaba also examined the restriction of technology and material from only China when there are many products and services Uganda can offer.
“For the case of Karuma dam project, the local content policy of at least 30% was not even adhered to. Ugandans are critically also missing multiplier effect on the economy since everything came from China and the benefits are also going there,” he stressed.
Uganda’s debt to China stood at USD$ 1.6bn as of December 2018 and is expected to more than double if the country takes the USD$ 2.23bn loan for the Standard Gauge Railway.
Museveni, who is in China for 4 days to attend the Forum on China-Africa Cooperation conference, has the best opportunity to face the host amidst emerging economically problematic loan conditions.
Museveni will also hold several other meetings largely with investors interested in bringing their resources to Uganda in the fields of energy, agriculture, infrastructure, oil and gas, security, among others.
The team is also expected to sign four non-bilateral agreements bringing to 10 the number of agreements to be inked in Beijing.