Uganda drops Chinese firm from $2.2bn railway deal, turns to Turkish rival

Uganda has begun to court Yapi Merkezi, a Turkish firm, that is building the Tanzanian railway for financing and construction of a railroad after it cancelled all contractual work it had earlier signed with China Harbor Engineering Company.

The east African nation has canceled the deal it signed with the Chinese company to build a 273-kilometer standard gauge railway (SGR) from its border with Kenya to the Ugandan capital, after the project failed to kick off eight years later. Kampala is now courting the Turkish firm and is awaiting response from it after signing a memorandum of understanding to start the project. Uganda hopes the Turkish company will help it find financiers for the project.

This follows China’s hesitance to finance Uganda’s economy with the $2.3 billion needed for the project, seemingly as a precaution, given previous debt defaults by other African countries like Zambia and Ghana. In August 2022, China wrote off bad debts by 17 African countries. Not even a trip by president Yoweri Museveni to China in 2018 could convince the China Exim Bank to approve the promised financing, thus forcing the government to start looking for funds in other global capital markets last year.