Chinese Market Is What Africa Needs Next, Says Uganda Leader

The president’s comments come before the next Forum on China-Africa Cooperation expected to be held later this year in Senegal. 

For China, the forum has been the vehicle to invest $345 billion into the continent as of 2019. The world’s second-largest economy has also offered $154 billion of loans to Africa since 2000, according to the China Africa Research Initiative at Johns Hopkins University. The investments helped develop industries, that now need a market, Museveni said. 

For the past 30 years, Africa has been able to benefit from the U.S. and European trade deals and “we would like China to do the same,” he said. “The only new thing we shall insist on is market access to the Chinese market, because that will help Africa a great deal.” 

Africa is seeking trading deals amid increased protectionism around the world, with nations such as Kenya exploring bilateral arrangements with the U.S. ahead of the potential end of AGOA, and the U.K., following Brexit. With the creation of the African Continental Free Trade Area, the debate has shifted to pursuing deals as a region instead of bilateral agreements.

“The play for increased trade access to the large Chinese market is a wise move,” said Mark Bohlund, a senior credit research analyst at REDD Intelligence. 

While Europe remains an important market for African exports due to its proximity and historical ties, “the growing trade links with China opens up for an opportunity as container routes are mostly used for African imports with unused capacity on the return routes,” he said.

Biggest Partner
China is sub-Saharan Africa’s biggest trading partner, with 2020 volumes in excess of $125 billion, followed by India with $41.8 billion and the U.S. with $34.5 billion. China also overtook the world’s biggest economy as the region’s largest source of investment in 2014. The biggest recipients of investments from the Asian nation include the Democratic Republic of Congo, Angola, Ethiopia, Kenya, South Africa, Uganda and Mauritius. 

Chinese investments in Africa are “going on very well,” Museveni said. “The next thing I would ask from them is to allow our products to enter their market quota-free, tax-free.” 

China’s Commerce Ministry didn’t immediately respond to a fax seeking comments.

Several big-ticket infrastructure projects in Africa, from multi-billion railroads in Kenya and Ethiopia to Uganda’s largest power plant, are funded and developed by Chinese entities. Museveni, who said he isn’t worried about Chinese contractors and investors in Africa, attributes their strength in finding and proposing workable business deals in Africa.

“It seems the western companies have thrown away their spectacles to see the business opportunities in Africa, and the Chinese have the spectacles,” Museveni, one of Africa’s longest-serving leaders, said. “So what do we do? They have the capital, they have the spectacles.”
The AfCFTA, as Africa’s trading bloc is known, is expected to become the world’s largest free-trading bloc of about 1.3 billion people. Beijing is expected to continue getting contracts and providing loans for infrastructure projects, as Africa moves to expand transport linkages to facilitate trade within the region.

China has a few trade arrangements on the continent, including a deal it launched with Mauritius as its first free-trade agreement with an African nation in January. 

Other highlights from interview:

• On the pending announcement of a final investment decision for the Uganda-Tanzania oil-export pipeline: “We agreed with the companies that it should be done soon and that our oil should come out by 2025. Nobody will change that,” Museveni said.
• On Uganda’s oil refinery that General Electric-led consortium said in 2018 it will develop: “We must build an oil refinery because we are 1,000 miles from the ocean and getting petroleum products from far away imposes an unreasonable cost on our people.”
• On exports: Uganda, Africa’s biggest coffee exporter, is on track to more than double shipments to 20 million 60-kilogram bags — the focus has shifted to improving quality of the beans. There are Chinese and South African companies already mining gold in Uganda, which shares geological formations with the neighboring mineral-rich Democratic Republic of Congo.
• On building a new railway: With or without financing earlier expected from China, Uganda will build new rail linkages using its own resources or new offers from countries, including Germany and Turkey.
• On recent attacks in Uganda: They are part of militant groups in eastern Congo, which are linked to Islamic State. Uganda, Congo and the United nations are discussing plans to remove the militant groups.