15 September 2018

Uganda: Why Museveni Returned From China Without SGR Deal

Photo: Yoweri Museveni/Twitter
Uganda President Yoweri Museveni in a bilateral meeting with Chinese President Xi Jinping.

Opinion among experts is divided on how fruitful President Yoweri Museveni's recent trip to the China-Africa forum was after it emerged he failed to ink a deal on funding for the the standard gauge railway.

Before the Forum on China-Africa Co-operation summit held last week, officials in Kampala had said that firming up plans for financing the SGR would be high on President Museveni's agenda.

But these plans were scuttled after President Uhuru Kenyatta asked China to give Kenya a grant to complete the Naivasha -Kisumu leg of the SGR.

The SGR has been promoted as the most important link for East Africa since the Uganda Railway was built in 1900.

Initial plans envisaged a railway line from the Mombasa Port in Kenya to Uganda, Rwanda and connecting back to Tanzania and the DRC.

A second line would connect South Sudan to the north. Currently the Kenya, Uganda and South Sudan links are the only ones in the discussion.

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Kenya's failure to conclude a financing deal means Uganda is a long way from starting to build its side of the SGR.

China had already told Uganda that it would only fund the Malaba-Kampala section of the SGR if Kenya committed to funding the entire Nairobi-Malaba leg of the project.

"Once Kenya and China commit to finance the remaining leg of the SGR, Uganda will be ready to start. We in Uganda are ready to conclude the financing agreements," said Kieth Muhakanizi, Secretary to the Treasury.

Some economists say that it is good that Uganda got token financing from the summit instead of concluding what would have been a costly white elephant for Uganda.

"Technically and economically the failure to get financing for the standard gauge railway is a good thing as it saves us from a white elephant, but politicians and thieves will disagree," said Fred Muhumuza, an independent researcher who previously worked as policy adviser to the Ministry of Finance.

Trapped in debt

Ezra Munyambonera, head of the Macroeconomics Department at the Economic Policy Research Centre agrees.

Dr Munyambonera said a number of African countries are increasingly trapped in debt due to China's previous unwillingness to pay more attention to the types of projects they lend to.

Most of this debt was acquired to invest in high cost infrastructure projects like the standard gauge railway and ports.

The State House press team presented the media with signings of MoUs that President Museveni witnessed including one between the Uganda National Oil Company and the state-owned Chinese National Off Shore Oil Company (CNOOC) for oil exploration in the Albertine graben.

Sources say these were a face-saving effort as they could have been concluded without the involvement of the president.

Presidential spokesperson Don Wanyama confirmed that the agreements signed at the summit were really the business of the Ministry of Foreign Affairs and that State House didn't know much about the contents.

Other documents signed while President Museveni was in Beijing include an economic and technical co-operation agreement worth $29.1 million.

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