Uganda has made headlines this week over claims that they have surrendered their most prominent and only international airport to China.
In November 2015, the Yoweri Museveni-led Ugandan government signed off on a now disastrous agreement to borrow $207 million from the Chinese bank Export-Import Bank to expand Entebbe International Airport. The Uganda Civil Aviation Authority (UCAA) has revealed that part of the agreement exposed Ugandan assets, including the country's only international airport, to the direct control of the Chinese lenders since the Ugandan state 'relinquished' their international immunity to secure said loan. The airport handles over 1.9 million passengers per year. Section 10.3 of the Repayment Mechanism Agreement states: "Each obligor hereby irrevocably waives any immunity on grounds of sovereign or other immunity for itself or any of its property in connection with any arbitration proceeding or with enforcement of any arbitral awards any court judgment."
Uganda and the lender's relationship has been turbulent as Exim Bank previously froze funding to the contractor responsible for the work at the airport due to the UCAA's failure to implement other clauses stated in the agreement. The UCAA was to create an escrow account to hold all of the Authority's funds and prevent the UCAA from spending the revenue without approval from Beijing. Progress on the expansion of the airport slowed down in 2020 due to a lack of finances. Reports state that completion at Entebbe International Airport has only reached 75,2% so far after the Chinese bank agreed to resume disbursement of monies.
The UCAA flagged up to 13 clauses embedded in the agreement that ensured that the Ugandan state renounced sovereignty and control over critical Ugandan entities. In March, this discovery resulted in Uganda dispatching an 11-member delegation to Beijing led by Dr. Chrispus Kiyonga, Uganda's Ambassador to China, for arbitration and possibly renegotiating the deal's toxic clauses. However, the Chinese lenders outrightly rejected their pleas, affirming that the terms of the upgrade Financing Agreement remain unamended and stating that any alterations would set a bad precedent. Exim Bank is, aforementioned, contractually obligated to enforce any of the provisions in the agreement. Furthermore, the deal raises questions about the level of due diligence conducted by Finance Minister, Matia Kasaija who has failed to account for how Uganda is in such a dire situation.
Minister Kasaija issued an apology on October 28 at his appearance before the Parliament's Committee on Commissions, Statutory Authorities, and State Enterprises (Cosase) for the mishandling of funds and lack of scrutiny. He further stated that the loan was the "best possible alternative" at the time and that should the UCAA unlikely fail to repay Exim Bank; the central government will intervene.
What China has done to Uganda is something critics call Beijing's "debt trap," where countries have had to forfeit national assets to China due to hastily accepting loan repayment plans without conducting thorough due diligence. Countries like Sri Lanka and Zambia have fallen victim to this "trap," losing direct control of their biggest ports and international airports over failure to pay up debts. Uganda's grace period for the agreement lapses next year; therefore, it is uncertain which direction this already hostile situation will head in the upcoming months.