China denies rumors of taking over Uganda’s International Airport over debt default
Africa, Asia-Pacific, News November 29, 2021 No Comments on China denies rumors of taking over Uganda’s International Airport over debt defaultIn 2015 the Exim Bank of China gave Uganda $207 million at an interest of 2% upon distribution. The load was subjected to be repaid in 20-year time with seven years grace period and it was to be used for the renovation and development of the country’s only international airport, Entebbe Airport. Uganda however failed to follow the loan’s payback schedule and President Yoweri Museveni dispatched a delegation to Beijing in the hopes of renegotiating the loan terms. These terms of events gave rise to the rumors that the Chinese state-owned bank now has claims to Uganda’s only international airport.
Several local news agencies in Uganda started flashing the headlines after The Daily Monitor, Uganda’s independent daily newspaper claimed that Kampala is all set to hand over the Entebbe International Airport to China. The headlines appeared on social media before several other international news agencies picked up the story stating Uganda’s case to be another example of China’s “Debt Trap” policy to subdue the struggling economies into giving up their assets to China.
However Chinese embassy in Uganda referred to these headlines as rumors, stating: “The malicious allegation that ‘Uganda surrenders key assets for China cash’ has no factual basis and is ill-intended only to distort the good relations that China enjoys with developing countries including Uganda. Not a single project in Africa has ever been confiscated by China because of failing to pay Chinese loans.”
The allegation of China’s taking over the airport was supported by the fact that the loan agreement has not been made public. Lawmaker Joel Ssenyonyi, who chairs the committee that conducted the parliamentary probe, said the loan agreement has been curated in such a way that Exim Bank holds approval powers over the airport’s annual budgets and that the loan terms allow China to “grab” the airport in case of default.
According to Ssenyonyi the agreement also states that the revenues from the airport’s operations shall be deposited in an escrow account where all the withdrawals have been approved by Exim Bank of China. The agreement also required legal proceedings to take place in China under Chinese laws in case of dispute arbitration is required. Keeping such tough requirements under consideration, Ssenyonyi termed the agreement to be very much one-sided in favor of China.
Uganda has already attempted to renegotiate the terms of the agreement earlier this year which was rebuffed by the Exim Bank of China. Uganda’s Finance Minister Matai Kasajia apologized in front of the national assembly last week for “mishandling” the funds from the $207 million loan.
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