Thu, Feb 01, 2018 - Page 6 News List

Chinese-built road divides Uganda as debt increases

Reuters, KAMPALA

Traffic is to soar above the muddy swamp between Uganda’s capital and its international airport when a new Chinese-built highway opens in a few months time, but the road itself is mired in controversy.

The Ugandan government has partly funded the 51km, US$580 million expressway with a loan, part of US$11 billion in borrowings in the decade since the World Bank canceled debts about a third that size as part of debt relief for poor states.

Uganda says the four-lane road is the jewel in the crown of an infrastructure program that will boost economic growth, but critics accuse Ugandan President Yoweri Museveni of squandering debt relief and mortgaging oil revenue before crude starts to flow in 2020.

China alone has loaned the east African nation nearly US$3 billion and is in talks for US$2.3 billion more as part of its Belt and Road Initiative.

“Uganda will grind to a halt as a country because of Museveni’s reckless borrowing. We’re like a patient on life support,” opposition Legislator Ibrahim Ssemujju Nganda said, alluding to a debt warning from the central bank last year.

“We’re not borrowing for consumption and luxury, we are investing,” Ugandan Ministry of Finance, Planning and Economic Development spokesman Jim Mugunga said. “The heightened borrowing is deliberate — it’s to put up modern infrastructure and push up economic growth.”

Begun in 2012, construction on the road should end in May, missing the initial target by a year, but it is the price that has alarmed Ugandan Auditor General John Muwanga.

In a 2015 report, he said that the road’s cost per lane per kilometer was double Ethiopia’s six-lane Addis-Adama Expressway, a road also built by China Communications Construction Co, but with more features.

“The project costs could have been much lower if the contractor had been procured through competitive bidding,” the report said.

The company did not respond to queries and the Chinese embassy in Kampala was not immediately available for comment.

Uganda National Roads Authority head of design Patrick Muleme said single-sourcing was a requirement for China providing a US$350 million Exim bank loan for the road.

Challenges like a 1.6km bridge over a vast swamp had driven up the cost, Muleme said.

“When you just see two projects and you compare costs it’s misleading, because it doesn’t take into account the peculiarities and the unique features,” he said.

Muwanga’s report compared only the costs of construction between the two roads, not including the US$100 million Uganda spent on acquiring the land, he added.

Fred Muhumuza, a lecturer at Makerere University who helped carry out initial economic studies for the road, said the price was “insane.”

The expressway is designed as a self-financing toll road, but Muhumuza said there is not enough traffic to Entebbe.

Twelve years after the World Bank forgave US$3.5 billion, nearly all Uganda’s debt, external debt is now at US$11.2 billion, according to central bank figures.

In this fiscal year’s budget, interest repayments — at 17.3 percent — are to consume the largest chunk of domestic revenues.

The climbing repayments come as public hospitals suffer shortages of basic drugs and supplies. Teachers, doctors and other public servants have gone on strike over low and unpaid salaries.

Other mega-projects funded by Chinese loans include two new hydropower dams on the River Nile worth about US$2 billion and a US$325 million expansion of Entebbe Airport. Talks are ongoing to fund a railway at US$2.3 billion.

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