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Uganda chases China’s cash after Western lenders baulk at bankrolling projects over human rights issues
- Western backers and the World Bank have backed out of financing major Ugandan projects including an oil pipeline and internet infrastructure
- The lenders pulled funding over environmental concerns and human rights issues following severe new anti-LGTBQ laws
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Uganda is facing a Catch-22 as it courts financiers to bankroll its multibillion-dollar infrastructure projects, including a railroad and an oil pipeline.
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The landlocked East African nation wants to build a US$5 billion pipeline that would transport crude oil from its Lake Albert oilfields in the northwest of the country to Tanga on Tanzania’s Indian Ocean coast.
It also wants to upgrade its internet infrastructure and construct a major railway line running from the capital Kampala to the Kenyan border town of Malaba.
But Kampala has a dilemma after dozens of banks and insurers from the West backed out of the pipeline over growing opposition from environmental groups. The World Bank complicated the situation further when it froze any new loan requests in August after Ugandan President Yoweri Museveni signed an anti-LGBTQ law, which criminalises homosexual acts, with severe penalties, including execution.
On Monday, Uganda’s finance ministry sought parliamentary approval to borrow US$150 million from the Export-Import Bank of China to expand its internet infrastructure.
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It is another example of Uganda’s reliance on borrowing from China. While Chinese lenders have not officially announced if they will finance the 1,443km (900-mile) oil pipeline, in September, Uganda’s energy and mineral development ministry told the Post that Sinosure was working with Eximbank to provide over half of the US$3 billion debt that Uganda needed to build it.
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