IN late November 2021, multiple reports claimed that the Chinese government is ready to take over the only Ugandan international airport – Entebbe International Airport.
Some of the reports state the Chinese government was set to take over the airport, others reported it has already taken over due to default in loan repayment which they cited as “$207 million”.
“Chinese lenders, the Export-Import Bank of China, also known as Exim Bank, has taken over the Ugandan Entebbe International Airport and other assets in the country over the failure of the Ugandan government to repay a loan,” Sahara Reporters reported.
The loan from China
In 2015, the Ugandan government got a loan from China through the Exim Bank in order to finance the expansion and upgrade of Entebbe International Airport.
Available documents show that the government borrowed $325 million, reports the Monitor, a Ugandan news media.
The report also noted that the Exim Bank agreed and released $200m for the first phase of the upgrade and was later to provide an additional $125 million for the second phase.
The loan was borrowed at 2 per cent interest with a maturity period of 20 years, including a seven-year grace period.
The grace period ends next year – 2022.
The projection is for the airport, built in 1972, to move from 1.9 million passengers annually to approximately 6.1 million passengers and 172,000 tonnes of cargo per year by 2033.
Uganda, China react to airport take over news
Meanwhile, the Chinese government have debunked the claim on taking over the airport.
The Chinese Embassy in Uganda said, “No project in Africa has ever been ‘seized’ by China because it could not repay its loan. On the contrary, China firmly supports and is willing to continue to make efforts to improve Africa’s capacity for independent development”.
This is not the first time news of China taking over an airport in Africa is being circulated. In 2018 the Zambian government refuted claims that China is set to take over Kenneth Kaunda International Airport for defaulting on loan repayment.
In another statement, Vianney Luggya, the Uganda Civil Aviation Authority (UCAA) spokesperson, also refuted the claim, describing the news circulating as false.
“I wish to make it categorically clear that the allegation that Entebbe Airport has been given away for cash is false. The government of Uganda 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.
Furthermore, the country’s Attorney General, Kiryowa Kiwanuka has said Uganda can meet the China loan terms and keep the airport.
Kiwanuka said the “Contracts in our view are bad when you put out obligations which are impossible of performance.”
“The obligation in this contract is all capable of performance,” Bloomberg reports.
A probe by the parliament inidcated that some of the clauses imposed on the loan were not favourable and could lead to a potential forfeiture of the airport in case of default.
“I apologise that we shouldn’t have accepted some of the clauses,” The Minister of Finance of Uganda Matia Kasaija told committee members in response to questions asked by the legislators.
The Uganda Civil Aviation Authority (UCAA) officials flagged up to 13 clauses in the loan agreement with China as “unfair and (being able to) erode the sovereignty of Uganda.”
According to reports, the Ugandan government had sent a delegation to China to renegotiate the loan terms; this turned out to be unsuccessful as China authorities refused to alter the terms.
The revelation that the Uganda government signed an agreement with onerous conditions has raised questions about the scrutiny and due diligence that bureaucrats conduct before committing the country internationally. The legislators who led the probe were also accused of approving the loan request that contained toxic clauses, reports the Monitor.
It further stated that Exim Bank once froze cash flow to the contractor, citing violation of the loan agreement after UCAA failed to implement some of the clauses, which were not favourable to Uganda.