China Eximbank provides $84.73 million buyer's credit loan for National Science, Technology, Engineering, and Innovation Skills Enhancement Project (NSTEI-SEP)

On April 26, 2019, China Eximbank and the Government of Uganda signed a $84,736,583.78 buyer's credit loan (BCL) agreement [ID#1420113022019211175] for the National Science, Technology, Engineering, and Innovation Skills Enhancement Project (NSTEI-SEP). The terms of the BCL are as follows: a 15 year maturity, a 4 year grace period, an interest rate of 6 month LIBOR plus a 3% margin, a commitment fee of 0.50%, and a management fee of 0.50%. The proceeds of the BCL are to be used by the borrower to finance 85% of a $99.69 million commercial contract between the Government of Uganda and AVIC-INTL Project Engineering Company, which was signed on November 17, 2016. The Government of Uganda is responsible for covering the remaining 15% of the total commercial contract cost ($14.95 million). According to the Government of Uganda’s Aid Management Platform (AMP), this loan has achieved a 66% disbursement rate, with China Eximbank making 9 loan disbursements (worth $55,709,572.79) between 2020 and 2022: a $9,516,816.75 disbursement on March 30, 2020, a $11,967,120 disbursement on May 8, 2021, a $3,636,640 disbursement on September 3, 2021, a $3,991,383.10 disbursement on October 18, 2021, a $12,117,591.81 disbursement on February 11, 2022, a $2,333,378.20 disbursement on April 28, 2022, a $2,347,276.35 disbursement on June 21, 2022, a $3,143,411.85 disbursement on October 13, 2022, and a $6,655,954.73 disbursement on March 27, 2023. According to the Uganda Ministry of Finance, Planning, and Economic Development's Report on Public Debt, Grants, Guarantees and Other Financial Liabilities for Financial Year 2021/2022, as of December 31, 2021, total loan disbursements amounted to $29,111959.85 and the loan’s amount outstanding (including arrears) was $29,111959.85. The objectives of the project are to: (1) establish a National Science, Technology and Engineering Skills Enhancement Centre (NSTESEC) and Technology Innovation and Business Incubation Centre (TIBIC) to enhance STEI Skills development and promote STEI based enterprise development among graduates, craftsmen, technicians, engineers as well as other scientists and innovators; (2) re-tool graduates, craftsmen, technicians and engineers and equip them to undertake various infrastructural works (electricity distribution, water drilling and distribution, road construction, building construction, pipeline construction, light railway construction, etc.) to promote local content, generate employment and create wealth; and (3) establish technology, innovation and business incubation facilities including workspaces and common-user facilities for scientists, innovators and techno-prenuers to help them further develop their technologies and business models. The project will be located on Uganda National Council for Science and Technology (UNCST) land/sites in the districts of Kiruhura (Sanga) and Mukono (Namanve). Sanga (Kiruhura district) – National Science, Technology and Engineering Skills Enhancement Centre (NSTESEC) and Kampala Industrial Business Park, Namanve (Mukono district) – Technology, Innovation and Business Incubation Centre (TIBIC). AVIC-INTL Project Engineering Company is the contractor responsible for project implementation. Its work will be oversee by the Government of Uganda's Ministry of Science Technology Engineering and Innovation and the Uganda National Council for Science and Technology (UNCST). As of September 2018, the planned construction period for the project was 2 years, and the planned equipment supply period was 4 years. The project was originally expected to commenced in May 2021. As of December 31, 2020, the China Eximbank loan had disbursed $9,516,816.75, leaving $75,219,767.03 undisbursed. Cadastral, topographic, hydrological, and geo-tech surveys were completed in 2020. Then, construction of the TIBIC commenced in February 2021. At that time, this component of the project was expected to reach completion by May 2022. Upon completion, the TIBIC will include an administrative block with offices, flexible workspaces and a smart conference room. Construction works for the NSTEI building started in March 2021. Then, on May 7, 2021, a formal foundation-laying ceremony took place. By the end of August 2021, this component of the project had achieved a 29% completion rate and was expected to reach completion on December 2024 in spite of Covid-19 pandemic restrictions. Construction of the National Institute of Techno-preneurship (NIT) is expected to reach completion by May 2023. However, as of December 20201, the Government of Uganda’s Aid Management Platform (AMP) identified the overall project completion rate as only 10%. It cited the following project implementation delays and challenges: (1) project design delays due to the COVID-19 outbreak affected travel of the technical staff from China to undertake technical surveys and completion of design works; (2) counterpart funding (from the Government of Uganda) was acquired belatedly on April 16, 2020, which delayed the issuance of a certificate of commencement of works until July 1, 2021; and (3) counterpart funding from the Government of Uganda was a condition of advance payment to the contractor, which led to disbursement delays and contractor cash flow problems.

Additional details

1. This project is also known as the NSTEISEP Project. 2. The Government of Uganda’s agreement code for the PBC agreement is L-0733. The system identification number in the Government of Uganda’s Aid Management Platform (AMP) is 872992112864. 3. The Government of Uganda’s internal loan identification number for this China Eximbank BCL is DMFAS No: 20904000. 4. This China Eximbank loan is not included in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 5. According to Uganda's National Budget Framework for FY 2019/20, the forecasted disbursement of the loan for 2018/19, 2019/20, 2020/21, 2021/22, and 2022/23 is $113.64 million, $49.43 million, $69.90 million, $66.09 million, and $19.04 million, respectively. 6. AidData has estimated the all-in interest rate by adding 3% to the average 6-month LIBOR rate in April 2019 (2.633%). 7. The Chinese project title is 建的乌干达职业教育项目.

Number of official sources

20

Number of total sources

37