In Summary:Uganda could very well have to forfeit its treasured Entebbe International Airport if it fails to repay the loan.
The $207 million loan was absolutely mismanaged by the Ugandan government.
The East African country is on the World Bank’s heavily indebted poor countries’ list.
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.
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.
Source: Insider
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