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Uganda’s engagement with China has often seen officials from Kampala troop to Beijing for loans, resulting in a rising debt situation with the Asian giant over the last decade.

Ugandan projects whose funding has been negotiated with the Exim Bank include $2.2 billion for the SGR, $1.44 billion for the 600MW Karuma hydroelectric dam, $482 million for 183MW Isimba power dam, $350 million for the 51km Kampala-Entebbe Expressway and $200 million for Entebbe International Airport expansion.

Of these, only the SGR loan has not been disbursed, making Uganda one of the African “friends” hooked on Beijing’s loans after a borrowing binge.

Kenya has also been flagged after piling debt beyond its cap.

In 2021, China’s ambassador to Uganda Zhang Lizhong said his country was rethinking its infrastructure financing policy in Africa and scaling back its support to big projects in order to fund more on social development projects like water supply.

In the East Africa region, Beijing’s scaling back on big-ticket project funding has created the notion that the Chinese are losing to European players such as Turkey’s Yapi Markezi, who are building Tanzania’s SGR, and now, Uganda’s.

Sources close to the SGR project in Uganda say that President Museveni’s about-turn from the Chinese to other financiers came in 2021 after it emerged that the country could have mortgaged the Entebbe International Airport over a $200 million loan from China.

Works and Transport Minister Gen Katumba Wamala also told Parliament that Uganda was treading carefully with China after detecting danger in Beijing’s “indecent proposal” that the SGR $2.2 billion loan be paid using oil money.

“The financier, Exim Bank of China, was concerned about the repayment of the loan. We told them that the government will be the one to pay the loan, you do not decide where the payment of the loan will come from,” Gen Katumba told Parliament in 2021.

Sources say that as the waiting game with Exim Bank went on, President Museveni vowed to review the SGR plan during the Covid-19 pandemic, telling his Cabinet that, unlike trucks, an effective railway transport system would have reduced the level of exposure to the virus in Uganda.

In the meantime, as the President sought alternatives to resuscitate the SGR project, his government sourced new loans to rehabilitate all the sections of the old metre gauge railway in efforts to see it haul at least 60,000 of cargo per month.

Malaba turnabout

The borrowing includes a $307 million sought from the African Development Bank (AfDB) in 2022, in addition to a €301.11 million ($325 million) loan from AfDB and €25.9 million ($28 million) from the Corporate Internationalisation Fund of Spain that Parliament approved in May 2021, to refurbish the line from Malaba to Kampala.

But transport experts say that even fully rehabilitated, the MGR still has inherent technical limitations that cannot enable it to carry more than 3.6 million tonnes per annum.

Yet cargo volumes between Malaba and Kampala are growing, currently standing at 18 million tonnes, set to reach 20 million tonnes in 2025 and 25 million tonnes in 2030, says Dr Richard Sendi, the SGR project head of planning and strategy.

Dr Sendi says that these cargo volumes landing at Malaba and growing each year give Kenya’s SGR viability if it links with Uganda’s, explaining why the new government in Nairobi has realised that there is no option to building the line up to Malaba.

“They are also looking for alternative financing,” he said.

With two SGR trains arriving at Naivasha daily, each carrying 56 containers, the numbers will continue to grow and overwhelm Kenya’s metre gauge railway that picks up the cargo via the link at Longonot, Uganda officials are optimistic that the country’s project has a lifeline.

Meanwhile, Tanzania seeing a slowdown of the Northern Corridor project, went on a fundraising spree to extent its SGR to the Great Lakes.

Their 1,637km line is being built in phases by contractors from Turkey and China. The first phase from Dar es Salaam to Morogoro (300km) is expected to start operating soon after successful test runs. - JULIUS BARIGABA, The EastAfrican

 

NAIROBI, Dec. 14 (Xinhua) -- Kenya's trade deficit widened marginally year-on-year to September as exports and receipts from tourism rose, the National Treasury said on Thursday in an economic report.

The deficit stood at 740 billion shillings (about 6.02 billion U.S. dollars), an equivalent of 5.4 percent of the gross domestic product (GDP) in September, from 5.73 billion dollars or 5.2 percent of GDP in September 2021, the Treasury in its quarterly economic and budgetary review report.

"Net receipts on the services account improved by 1.51 billion dollars to 1.86 billion dollars in September. This was mainly on account of an increase in receipts from transportation and tourism as international travel continues to improve," said the Treasury.

During the period in review, exports similarly grew by 14 percent to 7.41 billion dollars, up from 6.5 billion dollars in September 2021 primarily driven by improved receipts from tea and manufactured goods despite a decline in receipts from horticulture, the Treasury said.

The increase in receipts from tea exports reflected improved prices attributed to demand from traditional markets, added the Treasury.

On the other hand, imports increased by 18 percent to 19.9 billion dollars in the year to September mainly due to increases in shipments of oil and other intermediate goods, according to the Treasury. - Xinhua

 

Kenya is among Africa's top three recipients of diaspora remittances behind Nigeria and Ghana, according to a World Bank report.

Even so, Africa recorded the slowest growth in diaspora remittances compared to other continents in 2022, according to the bank's latest Migration and Development Brief. 

According to the report, Kenya received $4.1 billion (Sh503 billion) by end of November compared to $20.9 billion (Sh2.6 trillion) for Nigeria and Ghana's $4.7 billion (Sh577 billion).

Senegal and Zimbabwe have collected $2.7 billion and $2 billion respectively (Sh245.4 billion), closing among the top five nations in the region. 

Diaspora remittances continues to be the leading forex earner for Kenya for the fourth year running after outpacing tea, coffee and tourism. 

Last week, the earnings boosted the country's dwindling forex reserve, pushing them to 3.9 months of import cover compared to 3.7 months of import cover, lowest level since 2011. 

Even so, remittances as a share of GDP are significant in the Gambia (28%), Lesotho (21%), and Comoros (20%).

Sending $200 to the region cost 7.8 per cent on average in the second quarter of 2022, down from 8.7 per cent a year ago.

Remitting from countries in the least expensive corridors is on average 3.4 per cent compared to 25.2per cent for the costliest corridors.

World Bank says digital technologies allow for significantly faster and cheaper remittance services.

"However, the burden of compliance with Anti-Money Laundering/Combating the Financing of Terrorism regulations continues to restrict access of new service providers to correspondent banks," the lender says. 

World Bank says that remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 per cent to $53 billion in 2022, compared with 16.4 per cent last year.

The growth, though three times lower compared to the previous year is mainly due to strong flows to Nigeria and Kenya.

"Remittances in 2023 are projected to soften to 3.9 per cent growth as adverse conditions in the global environment and regional source countries persist,''World Bank says.

The report shows remittances to low and middle-income countries (LMICs) withstood global headwinds in 2022, growing an estimated five per cent to $626 billion.

"Africa stands to be the most severely exposed to the concurrent crises, including severe drought and spikes in global energy and food commodity prices".

Remittance flows are estimated to have increased 10.3 per cent to Europe and Central Asia, where rising oil prices and demand for migrant workers in Russia supported remittances, in addition to the currency valuation effect.

The Migration and Development Brief analyses trends in migration-related SDG indicators: increasing the volume of remittances as a percentage of GDP, reducing remittance costs, and reducing recruitment costs. - Victor Amadala, The Star

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