Thoughtless borrowing has crash-landed the Ugandan government in a mess as Chinese lenders refuse a request from the authorities to renegotiate the terms of a Chinese loan the country secured in 2015 without serious thought to the toxic clauses attached.
It has now emerged that the deal signed on Tuesday, November 17 2015, by the Uganda Government with Chinese lenders- Export-Import Bank of China (Exim Bank) to borrow $207 million at 2%upon disbursement virtually means Uganda has “traded” its most important and only international airport.
The loan had a 20-year term, including a seven-year grace period.
Certain provisions of the financing agreement with China expose Entebbe International Airport and other Ugandan assets to be attacked and taken over by Chinese lenders on arbitration in Beijing, Ugandan Civil Aviation Authority (UCAA) says.
It was also confirmed that China had rejected recent appeals by Uganda to renegotiate toxic terms of the 2015 loan, leaving the administration of Ugandan President Yoweri Museveni in limbo.
According to the report, the Ugandan government lifted international immunity in the agreement it signed to obtain the loans, exposing Entebbe International Airport to be taken over without international protection. In desperation, Uganda sent a delegation to Beijing in March hoping to renegotiate the toxic clauses of the deal, but officials returned empty-handed because China did not allow the terms of the deal of original agreement to be amended. Last week, Ugandan Finance Minister Matia Kasaija apologized to Parliament for “mismanagement of the $ 207 million loan” from China Exim Bank to expand Entebbe International Airport. Construction progress for the airport, built in 1972, has reached 75.2 per cent, with two runways having reached 100 per cent complete. Entebbe International Airport is Uganda’s only international airport and handles over 1.9 million passengers per year. Its abduction by China would greatly affect the legacy of Museveni, 77, who came to power following an armed uprising in 1986 and expose him to elections in defeat.
