In Summary

Terms. The loan contract neighbouring Kenya entered into with Beijing purportedly has several clauses in the interest of China, forcing Kenya into several compromises, including the waiver of sovereignty on national assets.

Recently, Kassanda North MP Patrick Nsamba (NRM) appeared on a morning television talk show and alleged that government of Uganda seemed to be deeply involved in the giveaway of land to Chinese investors.
“Yesterday, caucus meeting with President Museveni at State House Entebbe was not about the NRM roadmap; that was just a cover up. The issue was that the President wants 60 acres of Nsambya police land to be given to a Chinese investor to construct a forensic laboratory,” he claimed.

Whether or not Mr Nsamba’s claims are true, the implications of his statement suggests that despite government already being highly indebted to the Chinese government – with high interest rate loans, and some contracts which might not be in the best interests of Ugandans – there could also be further hidden private arrangements pressurizing government into giving away huge chunks of land to Chinese investors.
The fear is that if government can contemplate giving away land free to Chinese investors under undisclosed arrangements, then it is possible that government may have entered into contractual obligations with the Chinese that compels them to give away free land, or even national assets.

In 2018 when Auditor General (AG) John Muwanga met Speaker of Parliament Rebecca Kadaga, he expressed concern over the increasing Chinese loans that seem to be compelling Uganda to waive off its sovereign immunity and that of properties used as collateral. According to Deputy AG Keto Nyapendi Kayemba, “We’re taking in more loans whose conditionality are probably not very conducive for us as a country.”

Last October, Uganda signed another loan agreement with the government of China of a staggering $212.6 million loan (about Shs78 billion) for rural electrification. According to the minister of Finance Matia Kasaija, some concerns were privately noted around issues in the financing agreement, including Chinese insistence that Uganda opens an escrow account in Beijing and deposits money as security in case of default, and the holding of national assets as collateral in case of loan payment failure.

Apart from the rural electrification loan, Uganda also received other significant loans from the Chinese government at around the same time understood to be almost under the same terms and conditions including: 1) Loan for national backbone and e-government phase III $311,000 (Shs1.2b) 2) The Kampala-Entebbe Airport Expressway, $7m (Shs27b) 3) Nsimba Hydropower Project $9.7m (Shs37.6b) 4) Aviation Authority project $4m (Shs15b) and 5) Karuma Hydropower Dam $17.6m (Shs68.4b).

In Kenya mid last month, government officials involved in the construction of the standard gauge railway scrambled with embarrassment as details emerged of financial traps of Chinese loans Kenya signed with the Exim Bank of China in 2014 where it is alleged that Kenya waived sovereignty on its assets in case Nairobi defaults on loan repayments.
The loan contract neighbouring Kenya entered into with Beijing purportedly has several clauses in the interest of China, forcing Kenya into several compromises, including the waiver of sovereignty on Kenyan national assets, thereby giving way for the Chinese to easily takeover in case of loan repayment default.

According to Kenyan media reports, there is suspicion that assets included in the strict take-or-pay agreement is the Mombasa port.
In Uganda, even though the stringent loan terms and conditions coupled with high interest rates continue to worry Ugandans, it reminds unclear as to why increasingly large chunks of prime land is being given away to Chinese investors.