Uganda loses its only international airport to China due to debt default


China has rejected a request to renegotiate “toxic clauses” in a loan worth more than $200 million to expand the airport. The Ugandan president sent a delegation to Beijing to renegotiate, but the attempt was unsuccessful.

Uganda has lost its only international airport, Entebbe International Airport, to China due to non-payment of its debts, African media reported and as reported by the British newspaper The Guardian. Media India Today.

Lenders in China have rejected a request to renegotiate the “toxic clauses” of the more than $200 million loan approved six years ago to expand Entebbe International Airport.

In 2015, the Export-Import Bank of China (EXIM) loaned Uganda $207 million at 2 percent on disbursement. News X reported that the loan, earmarked for the expansion of Entebbe airport, came with a maturity period of 20 years, including a seven-year grace period.

However, according to international media reports, the Ugandan government has waived the international immunity clause to guarantee the loan, after which the Chinese lender can take back Entebbe International Airport without any international arbitration.

A newly purchased Bombardier CRJ900 Ugandan Airways aircraft sits on the tarmac at Entebbe Airport, outside Kampala, April 23, 2019. Photo/AFP

A statement from the Uganda Civil Aviation Authority (UCAA) reportedly indicated that some provisions of the financing agreement with China subject Entebbe International Airport and other Ugandan assets to be seized and seized by Chinese lenders after arbitration in Beijing.

Uganda attempted to renegotiate the “toxic” terms of the agreement. President Yoweri Museveni sent a delegation to Beijing to renegotiate with the Chinese government, but Beijing has repeatedly rejected attempts to renegotiate. A team led by former China envoy Dr Crispus Kiunga was publicly told in 2019 that there would be no amendment to the loan agreement.

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Last week, Ugandan Finance Minister Mattia Kasaiga apologized to parliament for “mismanaging” the multi-billion dollar loan.

Uganda is the latest in the list of African countries to have taken out commercial loans for infrastructure development, but later found out that they couldn’t keep up with the repayments.

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