China penetrates Uganda’s construction industry further as China Railway Group Ltd secures a $110 million deal to construct a 32-storey office tower in Uganda’s capital, Kampala.
The project which was commissioned by Uganda’s state-controlled pension fund has been stalled for 10 years, but with the new agreement, construction will begin in September and will be finished in two to three years, Uganda’s National Social Security Fund Chairman Patrick Byabakama Kaberenge stated.
The office tower project is part of Uganda’s National Social Security Fund’s (NSSF) plan to invest $600 million in housing estates and office blocks. According to Kaberenge, NSSF is lobbying the government to revise Ugandan laws to allow investment outside East Africa to boost its income.
Meanwhile, construction companies especially road contractors are complaining that Chinese companies are already dominating the construction industry in the country. The domination has stirred competitive resentment from Ugandans.
This resentment goes beyond road or building construction. In April 2017, local traders in Kampala closed their shops for days to protest unfair competition from Chinese and Indian traders. However, the government maintains its free-market stance.
China is Uganda’s top source of foreign direct investment. Between July 2013 and June 2016, Chinese projects amounted to 32 percent of the country’s foreign direct investment
Uganda’s National Social Security Fund rates itself as the biggest provident fund in East Africa. In June, the social security funds recorded 9.98 trillion shillings ($2.66 billion) of assets under management of which at least 70 percent of the investments are in fixed income, 25 percent in equities and the rest in real estate.