A top Chinese lender has imposed aggressive repayment terms on a $200 million loan to expand Uganda's Entebbe international airport forcing the government to repay its debt before funding public services.
Chinese state banks are the biggest source of infrastructure funding to Africa, and have been criticised for their predatory lending practices although details of contracts are rarely made public.
Under the loan from China's Exim Bank to modernise the Entebbe Airport, the Ugandan government is required to channel all revenue from the country's only international airport into an account held jointly with the lender, according to the contract.
The government is then required to use part of the revenue to repay the loan each year, before it can invest in public services. "These are (more) aggressive terms than what we have seen earlier," US-based research lab AidData said. Chinese creditors - unlike other lenders from developed nations - require governments to deposit some earnings from big infrastructure projects in bank accounts they control to serve as collateral.
