Kampala looks East for project financing deals

Saturday July 13 2013

Construction of the Entebbe Express Highway, one of the contracts awarded to Chinese companies. Picture/Morgan Mbabazi

Uganda is now looking East as it seeks to sidestep the stringent conditions for aid from Western donors.

Asian nations have become important players in the economy, financing development programmes through loans and grants and winning contracts to undertake big infrastructure projects. 

Western donors have been castigated for giving conditions, which include political accountability and respect for human rights before signing such deals.

Chinese construction firms, for instance, have been awarded infrastructure projects, including the 51km Entebbe Express Highway and the 600MW Karuma hydropower station on River Nile. 

Last year, Saudi Arabia, through the Islamic Development Bank, gave Uganda $80 million in loans to finance construction of specialised maternal healthcare facilities.

Kampala also secured a $12.5 million loan from Kuwait to reconstruct and equip technical institutes, and another $7 million grant for food security and nutrition programmes.


Foreign Affairs State Minister Henry Okello Oryem said good governance, freedom of expression and human rights were not priorities in the development of Africa in general and Uganda in particular.

“Our priorities are infrastructure development, energy for industrialisation, good roads to take our agricultural products to the market, railways to link us to the sea, and to educate our people,” said Mr Oryem.

Uganda says aid from Asian countries comes on mutual agreement and is more targeted at specific priorities while Western donors dictate where and how the money should be used.

Read: Uganda breaks from donor funded budget

Some Western donors have suspended aid to Uganda’s national budget because of alleged misappropriation of money they contributed towards the rebuilding of northern Uganda.

Before the aid cuts, Western donors were expected to inject $289 million into the national budget, but it came down to $19 million.

However, Uganda is not completely shutting out Western aid. “We want other donors who can complement the Western countries’ efforts. We know that aid from the West has been used more as a controlling instrument rather than development, but there is a review now because of competition from the East, which we find healthy and we need their aid as well as their co-operation,” said Lawrence Bategeka, a researcher at the Economic Policy Research Centre.

Trip to China

Early this month, Prime Minister Amama Mbabazi led a delegation to China to discuss financing of Karuma Dam, the development of Uganda’s oil and gas sectors in which the China National Offshore Oil Corporation is a major player, and other investment areas.

Although analysts said casting the nets wider in search of development partners is a smart move, they nevertheless argue that the silence of these Asian giants on domestic matters in relation to democracy and human rights will perpetuate tyranny.

In comparison, support from the East is lower, but analysts say it comes in handy. Last year, Kuwait and the Islamic Development Bank offered about $142 million in support of various projects.

Analysts argue that African governments need to be kept in check on human rights issues.

“We would like to have development that is inclusive and sustainable. We would also like to have democratic values, the rule of law and respect for human rights. If the East does not speak out on these issues, they would be indirectly imposing authoritarian rulers on Africa,” said Makerere University lecturer Mwambutsya Ndebeesa.