China is by far, the largest investor on the continent injecting over US$2.2billion annually. Badoreck says although being the largest investor is not a bad thing parse, African countries need to be aware of China's strategic interests, in order to be able to negotiate the deals in the continent’s interests.
China’s loans to African countries have been questioned with
experts saying China is here to actualize self-interests.
This featured prominently in discussions at the on-going 2019 Kampala
Geopolitics Conference in Makerere University.
Ingo Badoreck, the Konrad-Adenauer-Stiftung (KAS) director Rule of Law
programme in West Africa says although it is completely legitimate to have
infrastructure developments on the continue, there is a complete misbalance of
power between China and the African Countries.
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China is by far, the largest investor on the continent injecting over
Badoreck says although being the largest investor is not a bad
thing, African countries need to be aware of China's strategic interests, in
order to be able to negotiate the deals in the continent’s interests.
“Chinese government has funded the railway construction between Mombasa and
Nairobi to cost 3.6 billion euros. That money will be paid over the next 30
years. That means Kenya will not be in position to make independent fiscal
decisions, on the basis of the projected income because they are bound to pay these
cheques back,” Ingo Badoreck says.
He adds that the Chinese loans are completely underestimated by
many African leaders given the looming debt crisis with currently US$648
billion about 20% of external debt for African countries belonging to China.
But Morrison Rwakakamba, the Global Senior Director of Policy at Fenix
International, however, disagrees with Badoreck citing that it is now time for
Africa to focus more on its transformation basing on strengthened institutions,
infrastructure and fostering integration.
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Rwakakamba further argues that Africa is more prepared today than it was 50
years ago to decide on who to choose for investment on the continent. He
dismisses as rumour, the notion that Chinese government is taking over some of
the infrastructure projects in Africa due to loans.
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Economic Policy Research Centre (EPRC) research fellow Dr Madina Guloba
compares China’s investment models with Uganda to Ethiopia where both African
countries are heavily investing in infrastructure with the help of the Chinese
She says while there is citizen’s full involvement towards financing the
infrastructure projects in Ethiopia, the model is different with Uganda.
According to Dr Guloba majority of the infrastructure in Uganda built using
Chinese loans are not connected to production meaning it will be difficult to
recoup the money back to finance the loans.
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Kwezi Tabaro, the Deputy Director of LéO Africa Institute, a Kampala based
leadership development and training institute says China offers better deals
since their projects in Uganda, for instance, are time-bound compared to projects
funded by other partners.
“The Kampala Express High way is 51 kilometres and it was built in a space of
three years from 2015 to 2018. The Kampala Northern Bypass project has been
since 2005. That road was meant to be constructed for the Commonwealth
Heads of Government Meeting (CHOGM) which happened in 2007,” Kwezi says.
He adds that the 23 kilometres road hasn’t been done up to date
implying that for as long as the project is delayed, the government of Uganda
has to pay to the contractor.
But Dr Guloba says there is a huge difference between a deal
negotiated by China and the European Union. She says unlike the EU, given an
opportunity, China follows its deal and offers to construct.
She contends that it was a mistake by EU to give money to a country like Uganda
with many financial leakages especially for the Northern Bypass infrastructure
project without mechanisms to ensure their money is being put to intended use.
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Gunter Rieck Monchayo, KAS’ economic policy advisor in the
Sub-Saharan team says African people must be empowered to hold their leaders
He adds that the continent needs to devise practical means that fosters
regional integration including regional trade as well as supporting increasing
exports of value-added products to prevent the losses.
Dr Maggie Kigozi, the former director Uganda Investment Authority disagrees
that investors are causing illicit financial flows.
She is optimistic that once government ensures a good investment environment
with proper regulation and participation of the private sector, Africa will
benefit more from the loans.
“One of the ways to prevent this illicit financial flows is through the new
generation of very highly educated young people who will be able to identify
what maybe my father’s age mates failed to see. These will be in regulatory