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Monday, 24 December 2012 15:00

Uganda Seeks Russian Investment

PutinYosev2By Kester Kenn Klomegah

MOSCOW, December 24, 2012 (Buziness Africa) - Russian President Vladimir Putin and Ugandan President Yoweri Museveni have discussed prospects for bilateral cooperation in energy, engineering, geological exploration, construction, finances and military supply. Indeed, Museveni, for the first time, visited Moscow in September 2009 to meet with high-ranking Russian government officials, industry directors and business people at the Russian Federation Chamber of Trade and Commerce where he was strategically networking to employ Russian technology and investment capital to boost his country's staggering economy.

 

Arguably however, referring to his December visit to the Kremlin, Putin said "this is your first official visit to Russia – it is timed to coincide with the 50th anniversary since the establishment of diplomatic relations between our nations. I am very pleased that, due in part to your personal efforts, our trade turnover increased 12-fold last year. We are seeing some changes, but that is completely normal since we do not yet have the necessary instruments up and running yet."

 

Putin, however, promised to create mechanisms for more frequent business interaction and added that "there are many such areas: they include our mutual interest in cooperation in engineering, infrastructure development, energy, military technical cooperation and, of course, staff training. More than four thousand citizens from your nation have already been trained or are currently studying in Russia. All in all, we have many areas for cooperation."

 

"The heads of state planned to focus on ways to broaden trade, business and financial ties. There are good conditions for developing cooperation in areas such as construction, road and railway infrastructure, the extraction of hydrocarbons and other natural resources, as well as agriculture," the Russian president's press service has reported before the official meeting of both presidents.

 

Putin stressed that Russia has actively been strengthening relations with sub-Saharan Africa. Russia's trade turnover is growing; it is nearly $4 billion, and in the first 6-7 months of 2012, it reached about $1.4 billion, according to a transcript posted by the Kremlin Press Service. Russia's interests in the East African nation range from the supply of combat aircraft to oil and gas projects.

 

Uganda signed its first contract to buy six Sukhoi Su-30MK2 fighters from Russia in early 2012 for an undisclosed sum and is currently in talks with the Russian state arms export company Rosoboronexport over an option to purchase six more Su-30jets. Rosoboronexport Deputy Director, Alexander Mikheyev, on September 20, 2012 at an arms exhibition held in South Africa, assertively said and was quoted by Russian media: "Now, we are talking about an option, the Ugandans expressed interest in buying another six aircraft of this type."

 

In the oil and gas sphere, Russia's largest independent crude producer LUKoil has expressed interest in oil and gas exploration, production and refining in Uganda. Foreign interest in Uganda's oil sector has grown after crude oil deposits with reserves estimated at billions of barrels of oil were discovered in 2006 in the Albertine Graben area along the country's western border with the Democratic Republic of Congo.

 

Uganda is a landlocked country astride the equator which is about 800 km inland from the Indian Ocean and it lies on the northwestern shores of Lake Victoria. Uganda is bordered by Tanzania and Rwanda to the south, the Democratic Republic of the Congo (formerly Zaire) to the west, Sudan to the north, and Kenya to the east.

 

With a land surface of 241,139 square kilometers (roughly twice the size of the state of Pennsylvania), Uganda occupies most of the Lake Victoria Basin, which was formed by the geological shifts that created the Great Rift Valley during the Pleistocene era. The Sese Islands and other small islands in Lake Victoria also lie within Uganda's borders.

 

Museveni currently heads the East African Community, which includes Uganda, Rwanda, Burundi, Tanzania and Kenya. He is also the co-chair of the Common Market for Eastern and Southern Africa, which has 19 member states, including Egypt, Ethiopia, Zambia, the Congo, and many other nations in West Africa . The last organization that he is in is the International Conference on the Great Lakes Region of Africa, which includes many nations.

 

Museveni told Putin that he could use his position to push many viable projects through. "We are implementing various projects and I would like to mention them as well – they concern the development of railroads that connect the nations of East Africa to the Congo, Ethiopia and Sudan. There are also various energy projects."

 

Rosemary Ssenabulya, Executive Director of the Federation of Uganda Employers (FUE) told Buziness Africa from Kampala, the capital of Uganda, that Russians have the opportunity to get engaged in the country's oil sector (both exploration and refining), develop the infrastructure, invest in tourism, as well as find possibilities in the mineral exploration and power/energy sectors, while improving information technology and agriculture could also boost the national economy.

 

"The significance of investing in our economy cannot be undermined. For a country like Uganda, investing huge sums means more investment in our economy and therefore raises revenue, creating jobs for local people and having better living standards, which again translate into economic growth and development," Ssenabulya told Buziness Africa in an email interview.

 

Uganda's vast mineral resources and a recent discovery of oil will attract significant amounts of investment over the medium term. The country's relatively well-educated labor force, low levels of bureaucracy and economy diversification will attract funds into the labor-intensive service sector too (e.g. communications and financial services).

 

Before the Kremlin meeting, the Vice-President of the Russian Federation Chamber of Commerce and Industry, Georgy Petrov, told an exclusive business gathering attended by the Ugandan delegation, Russian industry directors, investors and diplomats that the Uganda's national economy demonstrates ongoing development and economic growth and is one of the leading places among African countries south of Sahara (average 6.4% per year), producing favorable conditions for foreign businesses, especially in manufacturing, agriculture, mining, energy and road construction.

 

He reminded that Russia was committed to the modernization of its economy through innovation and high technology. In this regard, the state has relied on Russian institutions for its development. Among the most important events of 2012, Petrov presented the example of the single economic space between Belarus, Kazakhstan and Russia, and Russia's accession to the World Trade Organization, which would undoubtedly contribute towards a stronger, deeper integration of Russia and Russian business into the global economic system.

 

Petrov further noted the friendly nature of Russian-Ugandan relations and the growing interest of Russian businesses working in Africa, including Uganda. In June 2009, a Coordinating Committee on Economic Cooperation with Sub-Saharan Africa (AfroCom), was created on the initiative of the Russian Federation Chamber of Commerce and Industry and Vnesheconombank to help promote and facilitate Russian business in Africa.

 

For three years, its membership base increased two times over and now stands at more than 120 organizations including business companies and public associations. Finally, Georgy Petrov stressed that Russian businesses are prepared to continue contributing to the development of Russian-Ugandan trade and economic relations as well as to other African countries.

 

According the information obtained from the Coordinating Committee for Economic Cooperation with African Countries (AfroCom) by Buziness Africa, at the meeting in the Russian Federation Chamber of Commerce and Industry, two agreements were signed. One with Agrotekhmash on the cooperation in agro-industry, and the other agreement was with the General Satellite on the cooperation in satellite communication and broadcasting. AfroCom further told Buziness Africa magazine that Russian delegations would visit Uganda to study investment possibilities and business cooperation with both state and private business organizations.

 

Most important for both countries, 2012 marks the 50th anniversary of the establishment of diplomatic relations between Russia and Uganda, whose ties have been traditionally friendly, the Kremlin press service said. Museveni paid a private visit to Russia in 2009. In 2011, he held a telephone conversation with Dmitry Medvedev, who was Russian president at that time. Bilateral trade between Russia and Uganda stood at $605.3 million in 2011 (Russian exports to the Ugandan market totaled $584.2 million), and $145 million in January-September 2012. (END)

 

 
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