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China-Africa relations
ChinaDiplomacy

Chinese bank imposes ‘aggressive’ terms over Uganda airport debt

  • Researchers say Exim Bank loan terms to upgrade Entebbe airport limits Ugandan government’s autonomy
  • All revenue from facility to be held in a joint account with lender, AidData says

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Researchers have raised concerns about the terms of a loan to upgrade Entebbe International Airport in Uganda. Photo: Handout
Agence France-Presse

A top Chinese lender has imposed “aggressive” repayment terms on a US$200 million loan to expand Uganda’s international airport, US-based research lab AidData said Monday, criticising the bank for forcing the government to repay its debt before funding public services.

Chinese state banks are the biggest source of infrastructure funding to Africa, and have been criticised for their predatory lending practices although details of contracts are rarely made public.
Under the loan from China’s Exim Bank to modernise the Entebbe airport, the Ugandan government is required to channel all revenue from the country’s only international airport into an account held jointly with the lender, according to the contract published Monday by AidData.

The government is then required to use part of the revenue to repay the loan each year, before it can invest in public services.

“These are [more] aggressive terms than what we have seen earlier,” Bradley Parks, executive director at AidData, said, adding the contract “limits the fiscal autonomy of the government”.

State-owned China Communications Construction Company began repairing runways and building new airport hangers in Entebbe in 2016 and the work is expected to be completed this year.

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