China denies Uganda Airport takeover
China has denied reports that China’s Export-Import (EXIM) Bank has taken over Uganda’s Entebbe International Airport over a failure to repay a loan the East African country secured for the expansion of its only international airport.
In 2015, China’s Export-Import (EXIM) Bank lent Uganda US$207 million at 2% for the expansion of Entebbe airport.
The loan came with a maturity period of 20 years including a seven-year (7) grace period.
However, Ugandan government is reported to have waived off the clause for international immunity, attaching its only international airport.
Uganda Civil Aviation Authority Spokesman Vianney M. Luggya said reports of the takeover are untrue: “The Uganda Government can’t give away such a national asset. We have said it before and repeat that it has not happened. There isn’t an ounce of truth in it, ” he said.
“The loan terms provide a grace period of 7 years, and we are still within that grace period during which only interest is paid, and government has not defaulted on those obligations,” he added in a Twitter post.
The Chinese Embassy in Uganda has also denied the take-over reports making rounds. “Why is money offered by Western countries to developing nations considered ‘assistance for development, while the money offered by China is labelled as ‘debt trap’? This view is not logical or correct!”, said Wu Jianghao, Assistant Minister of Foreign Affairs, China.
Background
In 2015, Uganda borrowed $207 million from the Chinese through the Export-Import Bank of China (Exim Bank). As expected, there were some conditions attached to the loan, among which were a 20-year maturity period and a 2% interest rate.
Must Read: 2022 budget is to please investors, rating agencies – Prof Bokpin
Uganda also reportedly used the Entebbe International Airport and some other national assets as some kind of collateral in the loan deal. And what this means is that the airport is at risk of being taken over by the Chinese.
Having realised this, Uganda sent delegates to Beijing earlier in the year in a desperate effort to try and re-negotiate the terms of the loan. Unfortunately, the Chinese refused to change anything. And the implication is that should Uganda fail to pay back the loan upon maturity, then it could very well have to forfeit its treasured Entebbe airport.
Now, what is even most unfortunate is the fact that the $207 million loan was absolutely mismanaged by the Ugandan government. The country’s Finance Minister, Matia Kasaija, has even had to apologise to the country’s senate for “mishandling” the loan.
As you may well know, borrowing isn’t really a bad thing. As a matter of fact, even some of the richest countries and companies in the world do borrow every now and then. However, the problem always lies with whether or not a loan is properly utilised. And in Africa, loans borrowed by countries are hardly ever utilised well.
African countries are notorious for borrowing a lot from both multilateral lenders and rich countries. Uganda, for example, is owing the likes of IMF and others. The country is also on the World Bank’s heavily indebted poor countries’ list, as previously reported by Business Insider Africa.
Now, it’s important to stress that Uganda has not technically defaulted on the Chinese debt just yet. As a matter of fact, repayment does not not start until next year.
But perhaps the reason everyone is worried over the possibility of a takeover of the Entebbe International Airport is because President Yoweri Museveni doesn’t seem to have any known plans on how to repay the country’s debts.
President Museveni has been ruling the country since 1986.
