Completed Development AidData Chinese Aid

China Eximbank provides RMB 200 million government concessional loan for Phase 2 of National Telecom Network Project (Linked to Record ID#752)

¥200M RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Lesotho
Country	Lesotho
Start Date	Dec 12, 2011
End Date	Nov 01, 2030
Duration	6,899 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`53047`

Grant Description

China Eximbank provides RMB 200 million government concessional loan for Phase 2 of National Telecom Network Project On August 10, 2011, the Chinese Government and the Government of Lesotho signed a concessional loan framework agreement for Phase 2 of the National Telecom Network Project.

Then, on December 12, 2011, China Eximbank and the Government of Lesotho signed a government concessional loan (GCL) agreement worth RMB 200 million to support Phase 2 of the National Telecom Network Project. The borrowing terms of the GCL are unknown.

The Government of Lesotho used the proceeds of the loan to on-lend to Econet Telecom Lesotho, a state-owned telecommunications operator in Lesotho.

Econet Telecom Lesotho (ETL), in turn, used the loan proceeds to expand, upgrade and modernize Lesotho’s telecommunications infrastructure. Anhui Telecom Engineering Co. was the contractor responsible for Phase 2.

Work appears to have began shortly after Anhui Telecom Engineering Co. signed an implementation agreement on April 24, 2012. The project was officially handed over to the Government of Lesotho on May 31, 2013. ETL did not honor its repayment obligations to the Government of Lesotho under the terms of its on-lending agreement.

According to a Report on the Consolidated Financial Statements of the Government of Lesotho for the Three Years 2013/14, 2014/15, and 2015/16 And Other Incidental Findings published by the Public Accounts Committee of the Parliament of Lesotho, '[Econet Telecom Lesotho] claims that it is not making profits but this is hard to believe as the Committee suspects transfer pricing practices.

Again, the services have not improved as expected when the loan was secured for Econet.

The Committee [is] concerned the Government of Lesotho is shouldering the burden of paying the loans on behalf of Econet while Econet is not remitting anything to the Government [of Lesotho].' As a provider of fixed-line telephone services, Econet had 53,000 fixed-line users and 4,100 fixed network users in Lesotho as of 2020.

The state-owned company also had 660,000 mobile users by that time with a digital core and intelligent network and billing system (see 2020 report by CCPIT Jiangsu).

📋 Staff Comments

This project is also known as the Econet Telecom Lesotho (ETL) National Network Phase II Project. The Chinese project title is 莱索托全国通讯网络二期项目 or 莱索托国家电信网络项目二期.
Government concessional loans from China Eximbank are denominated in RMB, so AidData relies on the face value of the loan (RMB 200 million) reported by the IMF. In the the database of Chinese loan commitments that it released in July 2020, SAIS-CARI refers to the face value of the loan as $9 million, which is substantially lower than the values reported by the IMF (RMB 200 million), the World Bank ($36 million), the Government of Lesotho ($20 million), and the Public Accounts Committee (M245,297,692.05).
SAIS-CARI also identifies this project as reaching the loan signature (i.e. official commitment) stage but not the implementation stage or completion stage. However, AidData records this project as completed based on the May 31, 2013 handover date reported by the Chinese Government.
According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Lesotho was 19.7499-years in 2011. AidData estimates the maturity of the China Eximbank loan that supported Phase 2 of the National Telecom Network Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Lesotho was 5.2499-years in 2011. AidData estimates the grace period of the China Eximbank loan that supported Phase 2 of the National Telecom Network Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 6. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Lesotho was 2% in 2011. AidData estimates the interest rate of the China Eximbank loan that supported Phase 2 of the National Telecom Network Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=07. China Eximbank also provided a loan for Phase 1 of the National Telecom Network Project (captured via Project ID#752).

📚 Sources & References

National Telecom Network Phase II
Remarks by H.E. Chinese Ambassador Mr. Hu Dingxian at Signing Ceremony of the Framework Agreement on Provision of Concessional Loan by the Government of the People's Republic of China to the Government of the Kingdom of Lesotho
Lesotho Structural Policy TA
Speech on the recent development of economic cooperation between China and Lesotho
驻莱索托大使胡定贤在中国援莱广电网扩建项目交接仪式上的讲话
援莱索托广播电视扩建（广电设备）项目签署对外实施合同
Kingdom of Lesotho : Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility
Request for Waiver of Nonobservance of Performance Criterion, and Request for Modification of Performance Criteria
莱索托通信科技部向安徽电信工程有限责任公司致感谢函
Govt Urged To Act On Econet
MINISTRY OF FINANCE PRIVATE SECTOR DEVELOPMENT DEP AR TMENT ST A TE OWNED ENTERPRISES ANNUAL REPOR T FOR THE YEAR ENDED MARCH 2018
Kingdom of Lesotho Lesotho Structural Policy TA Lesotho State-owned Enterprises: A Country Policy Note
May 2018 PSID Flat Export.xlsx
Report on the Consolidated Financial Statements of the Government of Lesotho for the Three Years 2013/14; 2014/15 and 2015/16 and Other Incidental Findings
驻莱索托大使胡定贤与莱财政大臣签署两国优惠贷款协议, “小即是美”: 中国海外发展融资的新纪元？
莱索托（2020年版） Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.