Faridah N Kulumba
Africa-Press – Uganda. The Italian government on 29th May this year, revealed to the president of the Republic of Uganda H.E Yoweri Kaguta Museveni the plans to fund the construction of a railway line in in his country. This followed a meeting that took place in Uganda between the Italian Ambassador to Uganda, Mauro Massoni, who led a delegation of investors from Italy. The Italian investor’s presented proposal is to ensure the reconstruction of the railway line from Tororo to Majanji, along with a port at Majanji in the eastern region of Uganda.
The aim
The project, estimated to be worth hundreds of millions of dollars, aims to enhance Uganda’s transportation infrastructure and boost regional trade. The planned railway line will facilitate trade from Northern Uganda and the neighbouring countries. The investment is expected to complement the planned Standard Gauge Railway linking Kenya to Kampala, currently under construction. The Italian-funded railway line will provide an alternative route for cargo and passenger traffic, reducing congestion and increasing efficiency in the region’s transportation network.
Previous efforts
Last year, the government of Uganda revealed the plan of reviving construction works on East Africa’s ambitious Standard Gauge Railway (SGR) line linking the port of Mombasa to Kampala and the neighbouring country Rwanda. The same year the government of the Republic of Kenya revealed plans to resume discussions with the government of China over funding an extension of a railway line to the Uganda border, eight years after negotiations began. The Standard Gauge Railway (SGR) was introduced in 2014 by regional leaders from Kenya, Uganda, Rwanda, and South Sudan. Unfortunately, when the railway line reached Naivasha, the Kenyan authorities put an end to it. The Chinese funders also declined to fund the SGR project on the Ugandan side. The government of Kenya had declined to get more funding from the Chinese financial institution over budget and political issues. The government of Kenya said that loans from China have remained high and Kenya is not willing to service any new loans from Beijing.In May 2023, Kenya said that they had been having talks with China, but it seems funds are not coming to the terms they were proposing. The country vowed to continue with the plan to build SGR to connect Naivasha and Kampala seeking for an alternative financier.
Then targeted funders
On 18th May 2023, Uganda’s Ministry of Works and Transport said that Kenya and Uganda were planning to seek an alternative financier for the SGR project to connect both countries. But did not name which specific European funders Uganda was wooing. On 12th January this year Uganda agreed to give the same Turkish private company Yapi Merkezi a contract for the construction of Tanzania Standard Gauge Railway for construction of the SGR on the eastern and western Malaba-Kampala-Kigali after the termination of the contract of China Harbour Engineering Company (CHEC) that had previously been contracted to build the 273-kilometer line from Malaba to Kampala after the firm failed to convince China Exim Bank to finance the project. Uganda had in 2015 entered into an agreement with Chinese firm China Harbour and Engineering Company Ltd to implement the project on the condition the firm helps secure funds for the railway from the China government. After years of fruitless talks with China on the funds, however, Uganda early this year terminated the agreement and instead commenced negotiations with Yapi Merkezi to undertake the project. Uganda is banking on the railway to boost speed and lower the cost of transporting exports such as coffee and tobacco. It currently relies on costly and slow road links and a century-old narrow gauge rail line built by former colonial power Britain.
Why Italy is funding the railway project in Uganda
Uganda and Italy currently share a warm relationship, with cooperative ventures spanning various fields. Italy has been a key player in Uganda’s development, particularly in renewable energy, infrastructure, and education. Cultural and educational exchanges have been fundamental to this relationship, fostering mutual understanding and respect. Bilateral trade is a significant aspect of Uganda-Italy relations. Uganda exports key products like coffee to Italy, while Italy exports machinery and pharmaceuticals to Uganda. This exchange reflects a partnership rooted in reciprocal benefits and shared development goals. In January this year the Prime Minister of Uganda Robinah Nabbanja while attending the Italia Africa Summit’s official dinner on behalf of President Museveni said that this was a key step in strengthening Uganda-Italy bilateral relations. This engagement paves the way for enhanced cooperation in trade, investment, cultural exchange, and development. Italy’s expertise in manufacturing, technology, and agriculture offers valuable opportunities for Uganda, potentially leading to more Italian investments and technological transfers.
Trade volume
In 2022, Italy exported USD 74.1 million to Uganda. The main products that Italy exported to Uganda were Rubber working Machinery (USD 6.31 million), Stone Processing Machines (USD 5.11 million), and Vaccines, blood, antisera, toxins, and cultures (USD 4.79 million). During the last 27 years, the exports of Italy to Uganda have increased at an annualized rate of 1.49 percent, from USD 49.6 million in 1995 to $74.1 million in 2022. In 2022, Uganda exported USD 265 million to Italy. The main products that Uganda exported to Italy were Coffee (USD 244 million), Fish Fillets (USD 7.6 million), and Cocoa Beans ($7 Million). During the last 27 years, the exports of Uganda to Italy have increased at an annualized rate of 6.57 percent from USD 47.6M in 1995 to $265M in 2022.
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