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Uganda’s growing debt is sustainable, and the country is not at risk of losing state assets to China, the country’s finance minister, Matia Kasaija, said this week.
Uganda’s auditor-general warned in a report released this month that public debt from June 2017 to 2018 had increased from $9.1 billion to $11.1 billion.
The report — without naming China — warned that conditions placed on major loans were a threat to Uganda’s sovereign assets.
It said that in some loans, Uganda had agreed to waive sovereignty over properties if it defaults on the debt — a possibility that Kasaija rejected.
“China taking over assets? … in Uganda, I have told you, as long as some of us are still in charge, unless there is really a catastrophe, and which I don’t see at all, that will make this economy going behind. So, … I’m not worried about China taking assets. They can do it elsewhere, I don’t know. But here, I don’t think it will come,” he said.
China is one of Uganda’s biggest country-lenders, with about $3 billion in development projects through state-owned banks.
China’s Exim Bank has funded about 85 percent of two major Ugandan power projects — Karuma and Isimba dams. It also financed and built Kampala’s $476 million Entebbe Express Highway to the airport, which cuts driving time by more than half. China’s National Offshore Oil Corporation, France’s Total, and Britain’s Tullow Oil co-own Uganda’s western oil fields, set to be tapped by 2021.
Economist Fred Muhumuza says China’s foot in Uganda’s oil could be one way it decides to take back what is owed.
“They might determine the price, as part of recovering their loan,” he said. “By having a foot in there they will say fine, we are going to pay you for oil. But instead of giving you $60 a barrel, you owe us. We’ll give you $55. The $5 you are paying the old debt. But we are reaching a level where you don’t see this oil being an answer to the current debt problem.”
Uganda’s worries about China seizing national assets are not the first in Africa.
A leaked December report in Kenya showed China was promised parts of Mombasa Port as collateral for financing a $3 billion railway it built from the port to Nairobi. Both Chinese and Kenyan officials have denied that the port’s ownership is at risk.
Reports in September that China was taking over Zambia’s state power company over unpaid debt rippled across Africa, despite government denials.
But the fear of a Chinese takeover of a sovereign state’s assets over debt is not completely without merit. Struggling to pay back loans to state-owned Chinese firms, Sri Lanka in 2017 handed over a strategic port.