On November 26th, 2021, reports emerged that China would take over the Entebbe International airport in Uganda, the latter’s only airport. The move was due to the inability of Uganda to repay the $207 it borrowed from the Chinese government. Although the Chinese and Ugandan governments have denied that a takeover of the airport is imminent, the event yet again focused the spotlight on the question of Africa’s increasing dependence on foreign loans.
Since 2013, Africa’s debt to GDP ratio has risen steadily, reaching 53 percent in 2017, with the continent’s total external public debt at 727 billion US dollars in 2021. Reports also estimate that African countries are indebted to China with 180 billion dollars. The sad reality, however, is that billions of dollars entering Africa in the form of loans and aids have little or no impact on ordinary Africans. Forty percent of the population is still living below the poverty line as of 2020, according to World Bank data, while just 8 African countries have more than 50 percent rating in the 2020 Infrastructure Development Index.
Many African leaders borrow to loot. Loans are borrowed and mismanaged because of the government's lack of commitment to transparency and accountability. The legislature and public service of each African country must ensure terms and conditions of loans are well understood.
The Uganda-China loan saga is a perfect example of putting a country at the mercy of its creditors. Situations like the scare of China taking over Uganda’s Entebbe airport will always dare the continent in the face. It is therefore essential that African countries start working to prevent such from becoming a reality.
Lending institutions such as the World Bank, International Monetary Fund (IMF), and foreign nations must start to demand that African countries intending to get loans from lending institutions start complying with the standards of democracy. The demand will ensure that the borrowing nations are economically healthier and well-placed to repay their loans. There is a need for African countries to get their economic policies right and spend the loans collected on programs that will benefit the citizens and improve the economy in the long run.
Government institutions such as the legislature, judiciary, and public service in African countries must strive to be independent of executive control. The effect of their independence will ensure that the terms and conditions of loans are carefully studied and analyzed before the agreements are signed.
African countries must reform their economies to become viable and generate economic prosperity. The reformation will reduce loans and ensure they are easily serviced— that is the only way for African leaders to escape the whims and caprices of the lenders.
Bright Ogundare is a writing fellow at African Liberty.