Gov't drops China loan over Ts and Cs
Mbongeni Mguni | Friday September 4, 2020 15:01
BusinessWeek has learnt that one of the sticking points of the negotiations was over the choice of main contractor for the project. Negotiations had run from June and collapsed without agreement recently, it is understood.
China had provided a P3.4 million grant in May 2019 to fund the road’s feasibility study, in anticipation of negotiations towards the loan. Botswana had secured a pledge of P10.2 billion in concessional loans from China after 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ministry had earmarked the possibility of securing the loan from China for the road rehabilitation, but that has been withdrawn due to the terms of the loan,” Finance ministry permanent secretary, Wilfred Mandlebe told the Parliamentary Accounts Committee on Monday.
“When we could not agree on the terms, we noted that the project was urgent and we could not go back and forth with the Chinese on the terms.
“The decision was that we 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 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 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 salt pans in particularly, 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 developments come as 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 government will largely look domestically for sources of funding, although approaches to bodies such as the World Bank and IMF could be considered.