China has rejected allegations that it may take over Uganda’s sole international airport if the country fails to service a $200 million loan for the expansion of the facility.
Reuters reports that a parliamentary probe last month concluded that China had imposed onerous conditions on the loan, including potential forfeiture of the airport in case of default, sparking public outrage.
The Chinese embassy in Uganda, however, said on Sunday that, “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.”
It added that, “Not a single project in Africa has ever been confiscated by China because of failing to pay Chinese loans.”
China has been accused by Western countries of luring poor countries into “debt traps” which they are unable to repay. Cash-strapped borrowers have been pushed to stake sovereign assets such as airports and seaports to access credit.
The Uganda loan was said to have been secured in 2015 from China’s Exim Bank, one of the many credit lines Uganda has acquired from China over the last 15 years to fund infrastructure projects including roads and power plants.
The loan agreement has not been made public.
Lawmaker Joel Ssenyonyi, who chairs the committee that conducted the parliamentary probe, said it gives Exim Bank approval powers over the airport’s annual budgets and that the loan terms allow China to “grab” the airport in case of default.
It was gathered that revenues from the airport’s operations are to be deposited in an escrow account where all withdrawals have to be sanctioned by Exim Bank, Ssenyonyi told Reuters on Monday, citing the agreement.
Meanwhile, Ssenyonyi further said that the agreement also requires any dispute arbitration or court proceedings to take place in China under Chinese law.
“So Uganda is locked out entirely, the contract is one-sided,” Ssenyonyi said.
A Ugandan attempt this year to renegotiate the loan terms had been rebuffed by Exim Bank, Senyonyi said, citing disclosures to the committee by the Finance Minister, Matia Kasaija.
But Reuters also reports that the Finance Minister, Kasaija declined to comment.
There have been fears that the Muhammadu Buhari-led government has made similar deals with China for the loans secured from the Asian country.
The House of Representatives Committee on Treaties, Protocols and Agreements in July 2020 expressed fears that Nigerian government ministries were signing off the country’s sovereignty in Chinese loan agreements.
The Committee stated this while the Minister of Transportation, Rotimi Amaechi made a presentation on the $500 million Chinese loan for the Abuja-Kaduna railway and others.
Chairman of the Committee, Nicholas Ossai, cited a part of the Galaxy Backbone $400 million loan to build and operate the National Information and Communication Technology Infrastructure Backbone as one of such agreements.
Reading out part of the agreement, he said, “The borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.”
