As China builds up Africa, some in Uganda warn of trouble

 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 hasn’t even begun to produce to borrow hundreds of millions of dollars for infrastructure projects.

Longtime 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.

And 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 revolted 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.

But 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 Uganda’s finance minister 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,” Finance Minister Matia Kasaija wrote in a confidential letter to Museveni in 2018 that was leaked to the local media.

The letter noted 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 cancelled Chinese-backed projects worth more than $20 billion last year, saying they would create an unsustainable debt burden.

Uganda’s national debt stood at over $10 billion in 2018, 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 China’s ruling Communist Party’s 70 years in power, Museveni praised Beijing for supporting Uganda’s economic development while Chinese Ambassador Zheng Zhuqian 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 the local think tank 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 the 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 $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. But 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 noted that other researchers had uncovered corruption linked to some Chinese projects.

Ugandan authorities have signalled more Chinese-backed projects are planned.

Museveni last month interrupted the bidding process for a contract to resurface the highway linking Kampala to the trade gateway town of Jinja in the east. In a letter to the public works minister, the president said he had identified the appropriate investor, China Railway 17th Bureau Group Company.

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 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,” said Ugandan opposition lawmaker Ssemujju Ibrahim Nganda. “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 over $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,” said Kamugisha of the local think tank. “I think it is very dangerous for Africa, very dangerous for Uganda. We will have no capacity even to breathe.”