NewsEast & Horn AfricaAs debts mount, Uganda divided over new, Chinese-built $580m expressway


Posted on Wednesday, 31 January 2018 12:32

As debts mount, Uganda divided over new, Chinese-built $580m expressway

By Reuters

 Indian nationals arrive from South Sudan's capital Juba to Entebbe International Airport, Kampala, Uganda, July 14, 2016. Photo: Stephen Wandera/AP/SIPATraffic will 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 government has funded the 51-km (30-mile) four-lane expressway with a $580m loan, part of $11bn in borrowings in the decade since the World Bank cancelled debts about a third that size as part of debt relief for poor states.

Uganda says the road is the jewel in the crown of an infrastructure programme that will boost economic growth.

The country's first expressway should trim the two-hour trip between the capital and international airport to 30 minutes.

Begun in 2012, construction should end in May, missing the initial target by a year.

But it's the price, rather than the delays, that have caused alarm.

"We do not have a uniform unit cost, standard unit cost to understand how much would a kilometre cost, it's not clear. So, this stretch, very narrow stretch, very short stretch, 51 kilometres to cost that much, it is something ridiculous, it is ridiculous," said Erias Lukwago, the Mayor of Kampala.

Critics accuse President Yoweri Museveni, in power for 32 years, of squandering debt relief and mortgaging much-anticipated oil revenues before crude starts to flow in 2021.

China alone has loaned the east African nation nearly $3bn and is in talks for $2.3bn more as part of its vast overseas development Belt and Road scheme.

Misplaced criticism

An Auditor General report noted the new road's cost per lane per kilometre is double Ethiopia's six-lane Addis-Adama Expressway, a road built by the same company -- the China Communications Construction Co. Ltd -- with more features like underpasses and link roads.

"So generations to come will have to shoulder this burden because they will have to be taxed heavily and will have to pay. So that's why we are saying our country has been mortgaged by Mr. Museveni. Even these Chinese who are coming here from - even these commercial banks we are borrowing from, Exim Banks and what not, the burden will finally come on our shoulders as Ugandans, our children and grand children will have to shoulder this burden which is very very unfortunate," said Lukwago.

The government says the criticism is misplaced.

Uganda's Finance Ministry said heightened borrowing is deliberate, to put up modern infrastructure and push up economic growth.

Patrick Muleme is the head of design at state-run Uganda National Roads Authority.

"The people that query the project costs for the Kampala-Entebbe Express way need to look at the detail, what are the individual components of this project that contribute to the cost. And If someone can tell us that the cement on Kampala-Entebbe express was twice and much as the cement on another project, the Kampala - Northern Bypass, then we can say look, what was the cause of the high unit cost. But otherwise if you look at the per-kilometer it's misleading because it doesn't take into consideration the scope. Where we are seated as UNRA we are comfortable that the project is reasonable and it was based on market value assessment and we are confident that that project will derive market value to Ugandans."

He also said single-sourcing was a requirement for China providing a loan for the road.

The company did not respond to queries, but Muleme said challenges like a 1.6 kilometre bridge over a vast swamp had driven up the cost.

"When you look at the mainland bridges, you look at the crossover bridges, you look at the interchanges, you find that all these contribute to the project costs that you see. You cannot just compare different projects per kilometre and you say because of this, this project costs more. Because even in this same country Uganda, no two projects will cost the same. You will find that one project may be passing over swamp where you need high fill, you rock fill, another project passing over dry land where it is a simple embankment, the projects will never be the same," Muleme added.

Slowing exports, declining agricultural output and bureaucratic dysfunction have all taken a toll on Uganda's growth, along with what critics say is rampant corruption.

It slowed to 3.9%  in the latest financial year from 4.8% the year before.

In the 2018/19 budget, interest repayments - at 17.3% - will 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.

The government has secured Chinese cash for more mega-projects, including two new hydropower dams on the River Nile worth about $2bn and a $325m expansion of Entebbe Airport. Talks are ongoing to fund a railway at $2.3bn.

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