Botswana Government backs out of China loan over T&Cs

The Botswana government has backed out of a proposed China-funded loan for the rehabilitation of the 300 km Nata-Maun road. This development comes after the two sides deadlocked over the terms of the agreement.

Mmegi newspaper’s BusinessWeek has learnt that one of the sticking points in the negotiations was over the choice of the main contractor for the project. Negotiations had run from June and recently collapsed without an agreement, it is understood. China had provided a P3.4 million grant in May 2019 to fund the road’s feasibility study, in anticipation of the negotiations towards the loan. Botswana had secured a P10.2 billion pledge in concessional loans from China after the government’s participation at the Forum for China Africa Cooperation in September 2018. The Chinese government had also written off P80 million in existing debt owed by Botswana.

“The (Transport) Ministry had earmarked the possibility of securing the loan from China for the road rehabilitation, but that has been withdrawn due to the terms of the loan,” Finance Ministry Permanent Secretary, Wilfred Mandlebe told the Parliamentary Accounts Committee last Monday.

“When we could not agree on the terms, we noted that the project was urgent and could not go back and forth with the Chinese on the terms.

“We decided to use our own resources and we are going to come to Parliament with a supplementary budget to fund that.

“The Chinese funding was one of the possible sources of funding, but it was taking too long.”

Mandlebe added;

“The Chinese did the feasibility study and came up with a report and on that basis, we started negotiating the terms.

“It was back and forth and we decided that we must fast track the project.

“They had their own terms beyond the financial terms; terms such as using Chinese companies and those are the things we contended with.

“The deal may financially look good but it was restricted to them.”

In a blog post last November, Chinese Ambassador to Botswana, Zhao Yanbo wrote that he had travelled on the Nata-Maun road and described it as being ‘in dire straits’. The route is a major economic corridor to the tourism heartland and the link to the Kazungula Bridge which is the preferred route to the rest of Africa.

“Due to long overdue service and poor maintenance, the road is in dire straits now,” Zhao wrote.

“The road near the saltpans, in particular, is full of potholes due to the low-lying terrain and frequent flood erosions.

“Because of the traffic problems they cause, those travelling from Francistown to Maun have to take a nearly 100 km detour.

“Surrounding tourist attractions have also suffered severe business losses.

“The residents were very happy when they heard that the Chinese government was going to help rebuild the road.”

The latest development comes as the government closely scrutinises its spending and debt levels, as the COVID-19 impact has burnt holes in the fiscus. Finance minister, Thapelo Matsheka has said the government will largely look domestically for sources of funding, although approaches to bodies such as the World Bank and IMF could be considered.

Source: https://www.mmegi.bw/index.php?aid=86886&dir=2020/september/04

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