The government is then required to use part of the revenue to repay the loan each year, before it can invest in public services.

“These are [more] aggressive terms than what we have seen earlier,” Bradley Parks, executive director at AidData, said, adding the contract “limits the fiscal autonomy of the government”.

No more hard cash from China, as Covid-19 deepens African debt

State-owned China Communications Construction Company began repairing runways and building new airport hangers in Entebbe in 2016 and the work is expected to be completed this year.

Chinese creditors – unlike other lenders from developed nations – require governments to deposit some earnings from big infrastructure projects in bank accounts they control to serve as collateral.

But the contract for the Ugandan airport goes further.

“The lender is asking not just for revenues from the new projects they are funding, but also from the underlying asset – or the airport – that already exists,” Parks said.

The airport, built in 1951, was generating about US$68 million in annual revenue prior to the expansion project and the money was used to fund public services according to Parks, citing data from the government.

Chinese lenders ‘reluctant’ to offer further African debt relief

The project led to public outrage last year after Ugandan media reported China would take control of the airport if the government in Kampala defaulted, a claim that Beijing later denied.

China Exim Bank did not respond to a request for comment.

US Treasury Secretary Janet Yellen this month said China needed to contribute more to global efforts to provide debt relief for poor nations that are struggling to repay after the pandemic battered their economies.