China’s assertive, large-scale investments in Africa are starting to find pushback in Uganda, where some critics worry the East African nation is using oil it has not even begun to produce to borrow hundreds of millions of dollars for infrastructure projects.
Longtime Ugandan President Yoweri Museveni recently caused an outcry by interfering in a bidding process for one major project and naming the Chinese firm he wanted, raising questions about Beijing’s growing influence.
While Chinese projects in Africa are promoted as coming with no political demands, Uganda recently issued a surprising statement against the protests in Hong Kong, where people have protested for months against the mainland’s interference in their affairs.
Museveni has praised China, the world’s second-largest economy, as the ideal partner to take on the sort of muscular projects he could only dream of when he took power over three decades ago.
He has spoken hopefully of shattering “bottlenecks” to prosperity with projects such as power plants that produce more electricity than Uganda currently needs.
However, resistance among some Ugandans to Chinese funding is growing as they see other countries balloon their debts to worrying levels. Some opposition figures allege that the funding can fuel corruption.
Even Ugandan Minister of Finance Matia Kasaija appears to be concerned that growing debt to China could have consequences for his country’s sovereignty.
“Given what is happening in our peer countries as regards to China debt, we strongly believe we should protect our assets from possible takeover,” Kasaija wrote in a confidential letter to Museveni last year that was leaked to the local media.
The letter cited the requirement to deposit money as collateral in escrow accounts in China, as well as the alleged failure of Chinese-run projects to hire Ugandans and use locally sourced materials such as cement.
In recent years countries including Nepal, Thailand and Sri Lanka have scrapped or scaled back Chinese-funded projects due to cost concerns or complaints that not enough work goes to local companies.
Malaysia canceled Chinese-backed projects worth more than US$20 billion last year, saying they would create an unsustainable debt burden.
Uganda’s national debt last year stood at more than US$10 billion, nearly a third of it owed to China, according to official figures.
The loans are usually approved with little opposition as the ruling party enjoys an overwhelming majority in the national assembly.
Speaking at a recent event marking the Chinese Communist Party’s 70 years in power, Museveni praised Beijing for supporting Uganda’s economic development while Chinese Ambassador Zheng Zhuqian (鄭竹強) said his country “firmly supports the Ugandan exploration for a development path with Ugandan characteristics.”
Ugandans are going to find themselves entangled in Chinese debt, said Dickens Kamugisha, a lawyer who runs a local think tank, the Africa Institute for Energy Governance.
“Our leaders, who are very naive, think that China is just giving us money without strings attached,” he said.
Resistance has been seen in other African countries. Anger in Zambia peaked last year with street protests and an online campaign to “say no to China.”
A Chinese-backed fish meal plant in Gambia drew protests this year over alleged pollution and overfishing.
In Uganda, authorities in recent years have approved massive loans to finance the construction of a US$580 million expressway linking the capital, Kampala, to an international airport, as well as hydropower dams that currently are surplus to the country’s needs.
The projects were financed mostly with loans from the Export-Import Bank of China.
In certain cases China’s Belt and Road projects are helping to reduce income inequality between regions in the countries where they are built, according to a report last year by the AidData research lab at the College of William & Mary in Virginia.
However, the report said it focused on only one aspect of Chinese financing — economic impact based on changes in nighttime use of electric lights across cities and rural areas — and said that other researchers had uncovered corruption linked to some Chinese projects.
Ugandan authorities have signaled more Chinese-backed projects are planned.
Museveni last month interrupted the bidding process for a contact to resurface the highway linking Kampala to the trade gateway town of Jinja in the east.
In a letter to Uganda’s public works minister, the president said he had identified the appropriate investor, China Railway 17th Bureau Group Co.
The intervention raised fresh concerns over accountability in a country plagued by corruption.
In an unrelated case, a Hong Kong businessman was convicted in New York in December last year of bribing Museveni, his foreign minister and the leader of Chad in efforts to secure oil rights for a Chinese energy conglomerate.
Museveni insists he has never accepted a bribe.
“We are fighting to become a colony of China,” Ugandan opposition lawmaker Ssemujju Ibrahim Nganda said. “And Museveni is entrapped. The things he wants to do, he thinks he can only do them with China.”
This month Ugandan authorities announced that the Export-Import Bank of China had agreed to provide more than US$450 million to upgrade roads in a region where oil exploration is taking place.
Critics alleged that the government is on a spending binge in expectation of oil revenues that are still far in the future — Uganda is not expected to produce oil before 2022 — and the governor of the central bank warned that borrowing against oil resources pushes the country toward a so-called oil curse.
Museveni is pushing back, saying spending on projects such as roads in the oil-producing region is necessary to enable oil pumping, to the economy’s benefit.
“They are borrowing from China on the basis that we have oil. That is a violation of the law,” Kamugisha said. “I think it is very dangerous for Africa, very dangerous for Uganda. We will have no capacity even to breathe.”
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