Tuesday, 15 January 2013 14:57

Newsletter 25

In this newsletter:

  • China helping Uganda improve road network
  • Chinese investment in Africa : Much to celebrate, but much to work on
  • China helping African consolidation

China helping Uganda improve road network

Uganda’s poor road network is one of the major bottlenecks to unlocking Uganda’s economic potential.

Economic experts said if this poor road infrastructure is addressed, Uganda’s economic potential, owing to its geographical centrality on the African continent, can be unlocked, boosting both intra-regional trade and domestic trade.

China, like elsewhere on the continent is helping Uganda to unlock this potential.

“According to a Chinese saying, people who want to be rich should build a road first. Chinese companies are playing an important role in the infrastructure development of Uganda,” Zhao Yali, Chinese ambassador to Uganda, said.

In June this year, the Asian country delivered the first batch of road equipment to the Ugandan government as part of a 40-year soft loan of about $106m to boost the country’s road transport.

While receiving the equipment that will be distributed to the various local governments in the country, President Yoweri Museveni said the equipment will help in the construction of major roads.

The equipment included 159 graders, 257 tipper trucks, 12 wheel loaders, six dozers, seven excavators and two low loaders.

Construction of the $350m Kampala-Entebbe Expressway is expected to start soon as the Government, the contractor China Communications Construction Company (CCCC) and other stakeholders are going through the final procedural stages.

The funds to construct the 37km road are from a preferential loan from China Export and Import Bank.

The road will link Kampala to Entebbe International Airport. “The main road is about 37 km and the spur road from Kajansi to Munyonyo is about 13km. The road is a standard expressway,” said Zhang Weidong, the project manager. Construction of the road will take five years.

“This road will play a very important role in Uganda’s development particularly in tourism and will ease traffic pressure,” said Zhao.

Another major road linking Fort Portal to Ntoroko, Bundibugyo and then eastern DRC is being upgraded by a Chinese construction firm — Chongqing International Construction Corporation.


  • Newvision.co.ug

Much to celebrate, but much to work on

As the relationship between China and Africa has blossomed in recent years, one area that has attracted particular attention is investment.

However, with the amount involved now at historic highs, it is urgent that China upgrade its investment in Africa so as to promote sustainable development.

Over the past 30 years China has made a sizeable investment in Africa. The Ministry of Commerce says that in 2010 China invested $2.1 billion in Africa, 3.1 percent more than the previous year. More than 2,000 Chinese companies have invested in various sectors, including electronics, telecommunications transport and agriculture.

Still, Chinese investment in Africa represents just a small piece of Chinese outward foreign direct investment worldwide, 3 to 4 percent in 2011, but it is growing. Africa is the third-largest recipient of Chinese outward direct investment behind Asia and Europe. By the end of 2011 total Chinese direct investment in Africa reached $14.7 billion, 60 percent higher than in 2009.

The investment strategies of Chinese companies are increasingly diversifying from agriculture and mining, to manufacturing, services, infrastructure, capability building and human resources training.

However, while China's investment in Africa is growing rapidly, it faces many challenges.The most significant of these is the urgent need to upgrade.

China's investment in Africa lies at the bottom of the value chain, which means not only low competitiveness when facing international rivals, but also risks lagging behind once Africa's economy gains a solid footing of sustainable development.

Protecting overseas interests is another big challenge for Chinese investment in Africa. The risks derive not only from market uncertainties but also from political and social instability.

If the status quo is maintained, investment management is also at risk. As the various interests and complexities in China's Africa policies multiply, especially regarding investment in the continent, managing those policies becomes all the more critical.

Added to all of this, there are signs that a spirit of innovation is being lost in China's investment in Africa. Many Chinese business people and officials are content with the way things are in the China-Africa economic relationship, scarcely casting an eye to the future and the road ahead.

Such a mindset is damnable if for no other reason than that keeping your eye on the long-term is much more profitable than being transfixed by the here and now.

So to harness and ease the way for Chinese investment in Africa, both Chinese government and businesses need to streamline investment management mechanisms, strengthen peace and security cooperation with Africa, improve methods of protecting overseas interests, and remain alert to risks.

If that is done there is no reason why Chinese investment in the continent cannot pick up, both in its speed and in its quality, strengthening a partnership that is already worth celebrating.


China helping African consolidation

James Shikwati director of the Nairobi-based think tank Inter Region Economic Network believes China is now helping realize Africa's founding fathers' vision of the continent after independence.

He says China's involvement in Africa is leading to the sort of unification of the whole continent.

"I see the Chinese coming as a godsent opportunity to now consolidate one continent as one country." he says

He says the world's second-largest economy is making African leaders think in a more integrated way. He also stresses the importance of China's investment in Africa and the building of infrastructure in helping create a more cohesive African whole.

"The Chinese have come. They have built the African Union headquarters in Addis Ababa, they have built infrastructure that is now cutting across African countries and they are already steering a momentum for a possible one African state," he says.

He insists those who accuse China of pursuing a new type of colonialism in Africa completely miss the point. "The Forum on China-Africa Cooperation has a three-year strategic plan. It is about bringing all these heads of state around the table to work together. Everything is discussed and written down clearly. “

Shikwati says the only significant downside of the Chinese negotiating with African leaders is that the African leaders of today are a product of the West, since many of them are educated abroad and steeped in the culture of their former colonial powers.

Shikwati says the Chinese approach is adhering to the Five Principles of Peaceful Coexistence by not interfering in the internal affairs of sovereign states.

With some countries in Africa experiencing more than 20 percent growth in the first five years, some have predicted the continent will be the next Asia and will become increasingly economically important in the 21st century.

"I think there are two scenarios. The first is that 50 years from now, we are going to see a well-developed African continent, that is able to manage its resources and become more integrated. The other is that it fails to achieve this," he says.

"I think it is purely a matter of how Africa manages to navigate its relationship with China and the West. We are in a unique position to gain from both sides. We don't need to kick anybody out."


Last modified on Thursday, 17 January 2013 15:31