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The new scramble for Africa between superpowers in this era has put a spotlight on the relationship African countries share with former colonialists. In 2021, media reports claimed that China was going to seize Uganda’s International Airport if they defaulted on a loan which was used for the upgrade and expansion of the airport.
Western countries and African civic groups viewed the potential seizure as proof that China was using ‘debt traps’ to control African countries. China refuted the allegations stating that they had no factual basis and are out to distort the good relations that they enjoy with Africa. As the months have gone, the truth has become more complex.
A new research paper that was published by AidData, a US based finance research lab, revealed that the Entebbe Airport is not at risk of being seized by China’s Export-Import Bank. The paper is based on the full version of the loan contract and concluded that China “does not engage in predatory lending but remains a shrewd negotiator who is willing to impose intrusive conditions upon sovereign borrowers to protect its balance sheet.”
The terms of Uganda’s $200 million loan are not unique to Africa. The Chinese Export-Import bank requires the Ugandan government to provide a cash deposit in an escrow account and requires all revenue generated by the Entebbe International Airport to be used to repay the loan in the event of default. The bank also requires the right to approve or reject the annual operating budgets of Uganda Civil Aviation Authority.
The power dynamics between China, a leading superpower and developing African countries like Uganda are often skewed but they do not necessarily imply malicious predatory relations.
China has often been accused by Western media and African activists of using “debt trap diplomacy” to install a new form of neo-colonialism and oversized control. It is a myth used to villainize China and rob Africans of their agency and sovereignty. Although, some of the terms of Chinese loans are tough, they do not have the same detrimental effect on African economies as loans from the IMF, World Bank, or any other Western-backed entities. There is very little evidence that there has been a single project in Africa that has been confiscated by China due to failure to repay loans. China has shown an openness to renegotiate loan terms with debtors and even cancel debt as seen in Angola, Botswana, Cameroon, Chad, and DRC in 2020.
China remains Africa’s largest trading partner and bilateral lender for public sector loans. China’s keen interest in the development of Africa purely serves China’s interests and goals. The onus falls on African leaders to find ways to negotiate better loan terms and capitalize on the opportunities that the new scramble for Africa is affording them to go beyond using financial credit to line their own pockets but make firm, forward looking decisions and take responsibility for their countries’ growth.