President Yoweri Museveni Surrenders Uganda’s Only International Airport For Chinese Loans

On Tuesday, 17 November 2015, the Uganda government represented by the then finance ministry and the Civil Aviation Authority, signed an agreement with the Export-Import Bank of China (Exim Bank) to borrow U$207 million at two per cent upon disbursement. 

The loan had a maturity period of 20 years including a seven-year grace period.

It has now emerged that the deal signed with the Chinese lenders virtually means Uganda “surrendered” its most prominent and only international airport.

The Uganda Civil Aviation Authority (UCAA) says some provisions in the Financing Agreement with China expose Entebbe International Airport and other Ugandan assets to be attached and taken over by Chinese lenders upon arbitration in Beijing.

It also emerged that China has rejected recent pleas by Uganda to renegotiate the toxic clauses of the 2015 loan, leaving Ugandan President Yoweri Museveni’s administration in limbo.

According to the Daily Monitor of 25 November 2021, the Ugandan government waived international immunity in the agreement it signed to secure the loans, exposing Entebbe International Airport to take over without international protection.

Some 13 clauses were deemed unfriendly and as good as mortgaging the airport and eroding the country’s sovereignty. The most troubling for the aviation bosses was a clause that gave Exim Bank the sole authority to approve withdraws of funds from the UCAA accounts.

The bank also had the power to approve annual and monthly operating budgets, which it could reject, and the rights to inspect the government and UCCA books of accounts. The China International Economic and Trade Arbitration Commission (CIETAC) in Beijing also had the mandate to resolve disputes.

First to raise the alarm was the former UCAA managing director David Kakuba who warned that failure to amend the clauses could expose government assets to attachment and take over by China.

In desperation, Uganda in March sent a delegation to Beijing hoping to re negotiate the toxic clauses of the deal but the officials came back empty-handed as China would not allow the terms of the original deal to be varied.

Last week, Uganda’s Finance Minister Matia Kasaija apologized to parliament for the “mishandling of the $207 million loan” from the China Exim Bank to expand Entebbe International Airport.

“I apologize that we shouldn’t have accepted some of the clauses,” Kasaija told members of the committee in response to questions asked by the legislators. There were also questions over the interest rate that was set by the China Exim Bank for the funds placed in an off-shore Standard Bank account that was used as collateral for the project.

Three weeks ago, Uganda Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises raised concern over terms of the loan acquired to upgrade and expand Entebbe International Airport.

Committee members led by chairperson Joel Ssenyonyi demanded the Minister for Finance, Planning and Economic Development Maria Kasaija, to explain whether due diligence had been made prior to the government signing the agreement with the Chinese bank.

Ssenyonyi asked the finance minister to explain at what stage the due diligence had been done on the loan financing terms, noting that the terms were not in favour of the taxpayer.

“It is right to understand how China has done this. But then, how has Uganda always done its loan agreements? This would have provided a meeting point between the two parties,” said Ssenyonyi.

A Legal Advisor at the finance ministry told the committee that they reviewed the agreement, especially on the waiver of immunity. He admitted that some conditions could not be negotiated.
President Yoweri Museveni Surrenders Uganda’s Only International Airport For Chinese Loans
President Yoweri Museveni Surrenders Uganda’s Only International Airport For Chinese Loans

“The President on his trip to China, raised this as one of the challenges that China ought to address in our agreement,” the advisor told the committee while under oath.

First it was Zambia, now it is Uganda.

This is the price that Africans pay for being ruled by incompetent clueless crooks!

Our continent is being mortgaged and pillaged for peanuts, and the Chinese are laughing all the way to the bank at how ignorant & useless our leaders are! pic.twitter.com/pcJIcYQf3l— Hopewell Chin’ono (@daddyhope) November 25, 2021

Progress of works at the airport has reached 75.2 per cent, with two runways having reached overall completion of 100 per cent.

The phase one project that commenced on 10 May 2016, was expected to have been completed by 09 May 2021. It was extended to 05 December 2022. But still, there are genuine fears the airport could be lost as Kampala is struggling to meet the strict loan repayment regimen.

Built in 1972, Entebbe International Airport is Uganda’s only international airport and handles over 1,9 million passengers per year. Its seizure by China would greatly dent Museveni’s legacy and expose him to election defeat especially by the younger and fierce rival Bobi Wine.

Museveni, who came to power on the back of an armed uprising in 1986, has defied the political laws of gravity which have felled other long-serving leaders in the region.

The 77-year-old has managed to maintain his grip on power through a mixture of encouraging a personality cult, employing patronage, compromising independent institutions and sidelining opponents.

During the last election about a year ago when he addressed the issue of stepping down, Museveni asked rhetorically: “How can I go out of a banana plantation I have planted that has started bearing fruits?”


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