ENTEBBE INTERNATIONAL AIRPORT — Uganda’s Foreign Affairs Minister Sam Kutesa has received Mr. Yang Jiechi, a Special Representative of Chinese President, Mr. Xi Jinping and Member of the Political Bureau of the Communist Party of China (CPC), Director of the Office of the Central Committee for Foreign Affairs, at Entebbe International Airport.
Mr. Yang Jiechi arrived in Uganda for an official working visit from 20 – 21 February 2021 reportedly at the invitation of President Museveni.
The main purpose of this visit will be key among others to discuss Uganda ‘s debt with China, EU sanctions on President Museveni adminstration and aid cuts from the west over Bobi Wine.
Sam Kutesa will lead Uganda’s Delegation to the technical officials meeting which will take place on Monday, February 21 at the Ministry of Foreign Affairs.
President Museveni will later meet Mr. Yang Jiechi at the State House Entebbe to discuss ways of extending Uganda’s repayment period among others after it became clear that the country is heading toward a debt crisis.
According to a senior official at the Bank of Uganda, unless the country is able to sustain a growth rate of at least 7 percent—which economic projections show Uganda will not do—the country will default on its payments.
As is the case for many African countries, China is Uganda’s largest creditor, making up 39 percent of total debt this past fiscal year.
If Uganda defaults, it is unclear how China will react. Will China flex its muscles and negotiate for the rights to Uganda’s sovereign assets like it did in Sri Lanka, or ease the debt pressure, by restructuring Uganda’s loans over a longer time period as it did in Ethiopia?
Several foreign governments and international financial institutions are hesitant to make loans to Uganda—citing corruption and human rights abuses.
They remain skeptical that Uganda will be able to honor them—except, apparently, China.
Museveni recently admitted that China is the only partner that would agree to lend Uganda, Tanzania, and Kenya $3.5 billion to construct a series of railways and roads.
In addition, China is financing a $4 billion oil pipeline, currently under construction, that will connect the western region of Uganda to the port in Tanga, Tanzania—giving the landlocked country access to the Indian Ocean.
Many of China’s loans to Sub-Saharan Africa can be seen in the context of China’s belt and road initiative.
China has reacted differently to each country’s individual debt crisis. At one end of the spectrum, China allegedly uses its leverage to gain strategic and material concessions if a debtor country is unable to pay their debts, exemplified by Sri Lanka handing over control of the Hambantota Port to China for ninety-nine years.
China’s alleged practice of debt-trap diplomacy, as it has been dubbed, has been hotly debated, though there seems to be a consensus that their lending practices are problematic.
At the other end, China works with governments to restructure loans over a longer time period—often forgiving past interest payments—as illustrated by China’s twenty-year-loan extension to Ethiopia.