Tanzania President John Magufuli has cancelled a Chinese loan worth $10 billion signed by his predecessor Jakaya Kikwete to construct a port at Mbegani creek in Bagamoyo over terms and conditions that, he said, beat the logic. Magufuli said that the terms of the Chinese loan agreement could only be accepted by a drunken man.
His predecessor, Jakaya Kikwete had signed the deal with Chinese investors to build the port on condition that they will get 30 years to guarantee on the loan and 99 years uninterrupted lease, according to local media reports.
Tanzania President Chinese Debt Trap
Another shocking demand made by the Chinese and accepted by Kikwete administration was that the Tanzanian government will have absolutely no power to raise concerns on whoever invests in the port during that period.
Dubbed as the “killer Chinese loan”, several organisations and African citizens had demanded the then President to cancle the agreement. They had warned that the move will have dire consequences but their concerns were overlooked and the deal was signed.
However, after coming to power, President Magufuli initiated the renegotiation process and pressed the investors to bring down the lease period to 33 years instead of 99 years signed by the previous government.
Magufuli administration also made it clear that there will be no tax or utility exemption for the Chinese investors and they will need government approval to start new operations at the port. However, the investors didn’t meet the deadline issued by the Magufuli government, hence, the agreement got cancelled.
China’s debt trap
China has often been accused of luring the poor African countries in its debt-trap by providing them loans for much-needed infrastructure projects and then control them when they fail to pay off their debts.
Recently, the Kenyan government had also raised the issue that China was planning to take over one of the country’s key seaports after the African country failed to clear its debts. Bejing also got Sri Lanka’s Hambantota port on the lease after the island nation failed to clear part of a massive loan.