China rejects allegations it may grab Ugandan airport if country defaults on loan

KAMPALA, (Reuters) - China has rejected allegations that it may grab Uganda’s sole international airport if the east African country fails to service a $200 million loan for the expansion of the facility.

A parliamentary probe last month concluded that China had imposed onerous conditions on the loan, including potential forfeiture of the airport in case of default, sparking public outrage.

The Chinese embassy in Uganda, referring to a local headline, said late Sunday: “The malicious allegation that ‘Uganda surrenders key assets for China cash’ has no factual basis and is ill-intended only to distort the good relations that China enjoys with developing countries including Uganda.”

“Not a single project in Africa has ever been confiscated by China because of failing to pay Chinese loans.”

China has been accused by Western countries of luring poor countries into “debt traps” which they are unable to repay. Cash-strapped borrowers have been pushed to stake sovereign assets such as airports and seaports to access credit.

The Uganda loan was secured in 2015 from China’s Exim Bank, one of the many credit lines Uganda has acquired from China over the last 15 years to fund infrastructure projects including roads and power plants.

The loan agreement has not been made public. Lawmaker Joel Ssenyonyi, who chairs the committee that conducted the parliamentary probe, said it gives Exim Bank approval powers over the airport’s annual budgets and that the loan terms allow China to “grab” the airport in case of default, said.