Jakarta, CNBC Indonesia – Uganda is one of the latest countries to stumble into China’s debt ‘trap’. It is known that one of the countries in East Africa had to lose Entebbe International Airport, the only international airport that handles more than 1.9 million passengers per year.
But Uganda is reportedly trying to change its loan agreement with China. This is to ensure the international airport and a number of assets are not lost due to default.
According to a Gulf News report released by Bloomberg, the agreement was made in 2015. The country borrowed US$ 200 million (around Rp. 2.8 trillion) from China’s Export-Import Bank (EXIM) to expand Entebbe airport.
The clauses it wants to change include the need for the Uganda Civil Aviation Authority to seek approval from Chinese lenders for its budget and strategic plans. Another rule mandates that any dispute between the parties must be resolved by the China International Economic and Trade Arbitration Commission.
The same thing was published in the Economic Times. Citing local media, Ugandan President Yoweri Museveni is reported to have sent a delegation to Beijing to negotiate with the Chinese government.
Uganda has been trying to negotiate since March 2021. But so far it hasn’t worked. The loan itself has a tenor of 20 years, including a grace period of seven years.
Apparently Uganda is not the only one experiencing this. Several other countries in the world also had the same fate. The following is a list of countries experiencing China’s debt trap, as compiled from various sources.
Sri Lanka
In 2010, China provided debt assistance of US$ 1.5 billion to finance the Hambantota port project located on the southern coast of Sri Lanka. However, in 2017 the South Asian country had to give up its ports and airports to be managed by China due to a debt default.
The decision was made by signing a contract to serve China’s state-owned company for 99 years.
At that time Sri Lanka was recorded to have a debt of US $ 8 billion to China. They are willing to take over their infrastructure because if they have to pay off their debts, this country will spend 94% of its gross domestic product (GDP).
Zimbabwe
Zimbabwe is also one of the countries that borrows money to build its infrastructure. But to China, the country is in debt for an activity.
Since 1998, Zimbabwe has sent troops and purchased equipment from China to help President Laurent Kabali fight Ugandan and Rwandan rebels.
To finance all these activities, Zimbabwe must owe China with an accumulated value of up to US $ 4 million or around Rp. 54.8 trillion.
But Zimbabwe could not repay the debt because it failed to manage it properly. The country must follow China’s desire to convert its currency to the yuan in exchange for debt relief.
The currency exchange took effect on January 1, 2016 after being unable to pay the debt due at the end of December 2015.
Nigeria
The same fate befell Nigeria. This country must feel the bitterness of the financing model through debt accompanied by agreements, because this is detrimental to the borrowing country in the long term.
In this case, China requires the use of raw materials and manual labor from China for infrastructure development in Nigeria.
The PUNCH report said Nigeria spent US$591.11 million in five years to pay debts to Exim Bank of China. However, Nigeria still owes China $3.48 billion at the end of June 2021.
(tfa/tfa)
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