Expert Speak Raisina Debates
Published on Jul 30, 2018
Modi in Uganda: New beginning for old partnership

Twenty-one years after the first and last bilateral meeting between India and Uganda, Prime Minister Narendra Modi became the second Indian premier to visit Uganda on 24 July 2018, on the second leg of the of his second three-nation African tour. There have been a series of recent high-level exchanges between the two nations: President Museveni visited India in 1992 and 2008 on state visits, and in 2015 to attend the Third India-Africa Forum Summit; former Indian Vice President Hamid Ansari visited Uganda in 2017. Modi’s visit was highly anticipated, especially given India’s growing influence on the global political scene, search for influence in East Africa and her recent economic success. Modi had previously visited Uganda in 2007 as the Chief Minister of Gujarat.

Although formal India-Uganda diplomatic relations can be traced only to 1965, contact between the two nations has a long history. Indians served as middle men in the colonial administration in East Africa and oversaw the execution of government projects. The Uganda Railway, for example, was built by an entirely Indian workforce. While many workers returned to India upon its completion in 1901, an estimated 6,724 Indians remained back in Uganda, resulting in a series of chain migrations from India to East Africa. By 1970s, over 60,000 people of Indian origin were resident in Uganda. Many of them fell victim to the populist politics of the tyrannical Idi Amin, in 1972, who would later expel all South Asians and redistribute their property. India severed diplomatic ties with Uganda as a result. From 1986, India gradually re-established links with the East African nation, as the Museveni era brought political stability and saw the restoration to Indians of properties lost during the Amin era.

Today, Indians in Uganda number 30,000 in a country of about 44 million, accounting for less than one percent of the population, yet contributing about 65 percent of the government revenues in the form of taxes. Indian firms are invested in all sectors of the economy from manufacturing to agriculture. The Ruparelia group, valued at $800 million, presided over by Ugandan-born Indian Sudhir Ruparelia, is invested in all sectors in East Africa: banking, insurance, hospitality, real estate, education, broadcasting and floriculture among others, providing employment to over 8000 Ugandans. The Madhvani group is another story of a simple beginning with roots in the Saurashtra, India, that has transformed into a business with a $500 million turnover in Uganda alone, offering employment to over 10,000 Ugandans. Investments in the industrial sector not only transform the local economy but contributed an estimated $15 million in annual remittance to India.

Ugandan expectations

Modi’s visit is expected to not only strengthen the existing economic relations but also pave way for further Indian investments to the country especially in the health, agriculture and Information Technology (IT) sectors. Uganda has been a significant beneficiary of India’s capacity building schemes through several Indian Council of Cultural Relations (ICCR) vocational and other non-vocational schemes and Indian Technical and Economic Co-operation (ITEC) capacity building schemes. There are approximately 500 Ugandan students in India at any given time. Every year Uganda receives several scholarships for students to study various degree and vocational courses in India; the numbers of students coming to India are expected to surge after the current visit. Cooperation in defence and counter-terrorism also received attention, members of the Uganda People's Defence Force (UPDF) are being trained in various Indian Army training institutions in India under the ITEC. The Indian military training team is deployed in Uganda’s Senior Command and Staff College (SCSC) in Kimaka to train soldiers. The Prime Ministerial delegation also donated three cancer scanning machines, in recognition of the fact that India is an important destination in the sub-region for medical tourism. This gesture is expected to open the dialogue between various aspects of health co-operation between the two nations in future. India’s exports to Uganda stood at $524.02 million, while imports from Uganda were valued at $68.02 million. Prime Minister Modi’s pledge to address this trade deficit by making Indian markets more accessible to Ugandan goods and service providers is likely to boost business sentiment in Uganda.

Lines of credit

But more significantly, two lines of credit, the first worth $146 million to electricity lines and substations and $64 million to agriculture, was announced. Uganda has been heavily investing in energy generation in the last five years. The $146 million line of credit is directed towards power distribution, and is expected to cut unit costs of production, boost the industrial sector, maximise export values and the countries production capacity, thereby facilitating job creation for the country’s 65 percent unemployed youth. The agricultural sector employs over 75 percent of Ugandans, contributing to 65 percent of the country’s GDP. The agricultural sector faces many developmental challenges: poor distribution networks; poorly developed supply chains; post-production losses; low export earnings due to unprocessed exports. Despite these challenges, agriculture remains the largest export earner, accounting for 80 percent of the total exports. Ugandans will warmly welcome the USD 64 million line of credit channeled towards modernising the dairy industry in order to make the commodity more competitive on the export market.  The two lines of credit are an example of demand-driven development co-operation between India and Uganda.

Moving forward

Interestingly, when Inder Kumar Gujral visited Uganda as Prime Minister in 1997, he presented Ugandans with a solar energy station in central Kampala and a box of maize seeds. Little did he know that he was sowing the seeds of co-operation which would germinate into larger conceptual manifestations of the same gifts he brought to Uganda: twenty-one years later, India would utilise its Lines of Credit to fund the energy sector and agricultural value addition. Thus, while India-Uganda relations have a long history, and have witnessed may ebbs and flows, the recent visit of the Indian Prime Minister is only set to strengthen the path of bilateral co-operation ahead.

John Patrick Omegere is a Research Intern at Observer Research Foundation, Mumbai. 

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