Tanzanian President John Magufuli has canceled a $ 10 billion Chinese loan signed by his predecessor Jakaya Kikwete for the construction of a port at Mbegani Creek in Bagamoyo on terms he says go beyond logic. Magufuli said the terms of the Chinese loan deal could only be accepted by a drunk man.
His predecessor, Jakaya Kikwete had signed the agreement with Chinese investors to build the port on condition of obtaining 30 years to guarantee the loan and 99 years of uninterrupted lease, according to local media.
Another shocking demand made by the Chinese and accepted by the Kikwete administration was that the Tanzanian government will have absolutely no power to raise concerns about anyone who invests in the port during this time.
Dubbed the “killer Chinese loan,” several African organizations and citizens asked the then president to cancel the deal. They had warned that the move would have dire consequences, but their concerns were ignored and the deal was signed.
However, after coming to power, President Magufuli launched the renegotiation process and urged investors to reduce the lease term to 33 years instead of the 99 years signed by the previous government.
Magufuli’s administration has also made it clear that there will be no exemption from taxes or utilities for Chinese investors and that they will need government approval to start new operations in the port. . However, the investors did not meet the deadline set by the Magufuli government, therefore the deal was canceled.
China’s debt trap
China has often been accused of luring poor African countries into the debt trap by granting them loans for much-needed infrastructure projects and then controlling them when they fail to repay their debts.
Recently, the Kenyan government also touched on the fact that China was considering taking over one of the country’s main seaports after the African country failed to repay its debts. Beijing also secured the lease for the Port of Hambantota in Sri Lanka after the island nation failed to write off part of a massive loan.