* Chinese companies winning many large infrastructure
* Possible deal dismays western diplomats
By Elias Biryabarema
KAMPALA, July 29 The Ugandan parliament is in
talks with a Chinese company on buying out the debts of
legislators facing high repayment fees on loans taken against
their salaries, a member of parliament said on Monday.
The arrangement has been criticised by diplomats and rights
groups, who say Uganda is giving too much leverage to China as
its companies secure many infrastructure and oil contracts.
Emmanuel Dombo, an MP who is a member of the parliamentary
commission which administers the house, said some legislators
were in financial distress from high-interest loans contracted
from banks and money lenders.
"We're discussing with a Chinese company which has access to
cheap money from Chinese banks so that they can come in then buy
and restructure these loans," Dombo told Reuters.
He declined to name the company in question.
China is the biggest financier of major government
infrastructure projects in Uganda. Several large contracts have
recently been handed to Chinese state-owned companies, with
almost all the deals sweetened with cheap but conditional
Rights groups say China bailing out MPs would compromise
lawmakers who have to approve the terms of all loans the
government of Uganda contracts from China.
Western diplomats have also voiced concerns about the deal.
"It's clear this makes a mockery of Uganda's independence
and may not serve the long-term economic interests of the
country," said one senior western diplomat in Kampala.
A Ugandan legislator earns a gross salary of about 20
million shillings ($7,700) every month, roughly 50 times higher
than the average wage but dozens are reportedly struggling with
their finances after taking loans linked to their salary.
Local media reports suggest about 40 MPs were taking home
nothing at the end of every month after loan repayment
deductions from their salaries while another 50 were receiving
less than one million Ugandan shillings.
Dombo refused to disclose how many legislators in the
country's 383-member House were indebted but local papers have
reported that most MPs took on loans tied to their salary at the
start of their five-year terms.
Dombo said the burden of payback overwhelmed most
legislators when banks increased their interest rates on the
back of soaring inflation in 2011, the same year they were
elected into the parliament.
"Members have become indebted because our electorate are
poor, they expect a lot from us, so members take on these loans
to help these people but end up overwhelmed," Dombo said.
Godbar Tumushabe, executive director of Advocates Coalition
for Development, a Kampala-based economic think-tank, said
Ugandan MPs would not be able to vet Chinese loans objectively
if they have been bailed out by China themselves.
"It is absurd", Tumushabe said. "These are the same people
who are supposed to guard the economic interests of the
Chinese oil explorer China National Offshore Oil Corporation
(CNOOC), along with Britain's Tullow Oil and France's Total, is
currently negotiating with Uganda the terms of a project
involving a refinery and a pipeline.
China has also given Uganda $500 million worth of credit
each to two hydropower dams to be developed on the River Nile
and both projects have been given to Chinese state-owned firms.