Accessibility links

Uganda Awards Another Dam Project to Chinese Company

China's influence in Uganda is growing, with two dam contracts recently awarded to Chinese companies, offers of cheap credit and even a possible deal to buy the debts of Ugandan MPs. But some rights groups worry that it could come at the expense of the country’s independence.

The Ugandan government, lured by the promise of cheap credit and heavy investment, is turning more and more toward China.

Chinese firms have been pouring into the country. According to the Chinese Embassy here, 45 new companies set up shop in Uganda just last year. And state-owned Chinese companies were recently awarded contracts to build Uganda’s two newest hydroelectric dams. The largest is estimated to cost almost one and a half billion dollars.

Chinese investment has been creating jobs in Uganda, and the new dams should help the country meet the energy demands of its fast-growing population, says Minister of State for Energy Simon D’Ujanga. Plus, he adds, cheap loans sweeten the deal.

“We have a bilateral arrangement with the Chinese government for cheap capital. It is a concession which is at a very low rate, and therefore we take advantage of that,” said D’Ujanga.

D’Ujanga acknowledges that low interest rates are not the only thing that makes China an attractive business partner. “If anything, the Chinese government is more liberal than the other lenders. When they come, we discuss strictly business, and that’s all. They don’t start asking many questions which are not related to the business,” D’Ujanga noted.

The questions China does not ask are about governance and human rights. Godber Tumushabe is director of the Kampala-based Advocates Coalition for Development and Environment. He said this no-strings-attached approach is one of the main reasons why many African leaders are seeking Chinese investment.

“They don’t want to be held accountable to any standard in terms of good governance, in terms of human rights, in terms of even economic governance. Because some of these regimes, they are patronage regimes, they are client regimes, and therefore they don’t want to be held to any standard that Western countries normally would demand,” Tumushabe said.

China’s involvement with the Ugandan government has recently taken a more personal turn. Last week, lawmakers said that a Chinese firm is negotiating a deal to buy off the debts of Ugandan parliamentarians.

Tumushabe explains that many Ugandan lawmakers overspend during their campaigns, and end up in debt to other politicians. If the Chinese deal goes through, he said, it would compromise them even further.

“It’s really more or less like selling away the other aspect of your independence. All of a sudden, you have to probably look favorably on some of the transactions that China is doing here.”

According to reports in the local media, Ugandan President Yoweri Museveni opposes the deal. Tumushabe said it is the country’s very sovereignty that is at stake. “I don’t think that a state that claims to be sovereign, like all these African states normally want to claim, should be in the business of allowing another state to come and pay off the debts of your elected leaders. I think that’s a responsibility that the state should have to its citizens," said Tumushabe. "To make sure that the elected leaders do not mortgage themselves to another country.”

But, he adds, Uganda’s behavior is not unusual. Governments across the continent have been turning to China to avoid having to make the changes that a growing middle class demands, he said.

“The presence of China gives a lease on life for regimes across the world, and more specifically in Africa - regimes that are not yet ready to reform, both in terms of economic reforms but also in terms of governance reforms,” said Tumushabe.

D’Ujanga insists that the Ugandan government knows what it is doing when it comes to China, and is not sacrificing its independence. “Not at all. This is not the first time we are dealing with the Chinese people. We have dealt with them before, and we can predict them,” he stated.

But Tumushabe warns that too few politicians weigh the real costs of cheap Chinese credit. When it comes to international relations, he says, there is no such thing as a blank check.