China’s Take Over Of Ugandan Airport And Lessons For Nigeria

China’s controversial charity to African countries is beginning to backfire with Uganda being the second scape goat after Zimbabwe.

Uganda Government risks losing one of its international airport due to its inability to repay a Chinese $207m loan secured from Export-Import Bank of China in 2015.

The Uganda Civil Aviation Authority (UCAA) reportedly used its Entebbe International Airport and other assets as collateral for such loans, according to local media outlet, Daily Monitor.

Nigeria is among China’s biggest debtor in Africa with a total of $3.48bn bilateral loan borrowed from Exim Bank of China, according to the Debt Management Office.

Apart from the $3.48bn, the FG is also planning to borrow from the Asian giant to fund 2022 budget.

Some of the projects under which the monies were borrowed are the building of terminals at the five major airports valued $500m at 2.5 per cent interest.

The airports are the Murtala Muhammed International Airport, Lagos, Nnamdi Azikiwe International Airport, Abuja, Port Harcourt International Airport, Mallam Aminu Kano International Airport, Kano and the Akanu Ibiam International Airport, Enugu. The MoU for the $500m was signed in Beijing, while the project was constructed by China Civil Engineering Construction Corporation (CCECC).Nigeria’s rail way system are under the mercy of China as a default could hand China right to administer Nigeria’s railways.

The Abuja urban railway system that was commissioned in 2017 was a product of $500m loan taken from China, while on the Abuja-Kaduna Rail System, the country is owing China $500m.

The Lagos-Ibadan rail way project, according to Nigeria’s Transport Minister had a loan of $1.5bn.

Only $150m has being paid out of the $2bn borrowed for the Abuja-Kaduna and the Lagos-Ibadan, according to Rotimi Amaechi, who is Minister of Transport.

The China Export-Import Bank also provided $328m to support Nigeria’s National Information and Communication Technology Infrastructure Backbone Phase 11 (NICTIB 11) between Galaxy Backbone Limited and Huawei Technologies Limited (HUAWEI).

Another project is the 700MW Zungeru Hydroelectric Power Project which will cost $1.3bn with 75 per cent coming from China.

All of China sponsored projects have Mezzanine Clause that gives China the right to take over Nigeria’s infrastructure in the term of default.

A Mezzanine financing is a debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default.

Based on the clause, if Nigeria should fail to pay as and when due, China would seize the infrastructure, administer it and recover their investment.

In November 2021, the United States Secretary of State Antony Blinken advised Nigeria and other African countries about their growing appetite to borrow from China.

Bliken had described China’s investments in Africa as “tremendous debt that they can’t repay.”

But Nigeria’s Foreign Minister Geoffrey Onyeama, said Chinese influence really doesn’t come in, because the loans are not grants and they are being serviced.

Onyeama also said that Chinese loans are competitive and best for the country at the material time.