Completed Development AidData Chinese Aid

China Eximbank provides $32.8 million loan for Phase 1 of National Telecom Network Project (Linked to Record ID#53047)

$32.83M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Government of Lesotho
Country	Lesotho
Start Date	May 09, 2008
End Date	Mar 27, 2028
Duration	7,262 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`752`

Grant Description

China Eximbank provides $32.8 million loan for Phase 1 of National Telecom Network Project On December 20, 2007, the Chinese Government and the Government of Lesotho signed a concessional loan framework agreement for Phase 1 of the National Telecom Network Project.

Then, after months of negotiations, China Eximbank and the Government of Lesotho signed a government concessional loan (GCL) agreement worth LSL 228 million ($32,825,081.10) on May 9, 2008 to support Phase 1 of the National Telecom Network Project.

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period5 years

💹 Interest Rate2%

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

The purpose of the project was to acquire CDMA 2000 telecommunications equipment and build base stations across the country. ZTE was the contractor responsible for implementation. As of January 2009, 60% of the ZTE equipment had arrived in Maseru. Phase 1 was completed as of March 2010. 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].'

📋 Staff Comments

This project is also known as the Econet Telecom Lesotho National Network Project Phase I Project. The Chinese project title is 莱全国通讯网络一期项目 or 莱索托通讯网络扩充项目 or 莱莱索托国家电信网络扩展项目一期.
Econet Telecom Lesotho (ETL) came into being following the merger between Telecom Lesotho and Econet Ezi ~ Cel Lesotho in April 2008. When Eskom Enterprises (Pty) Limited sold its shares to Econet Wireless Global, Econet became a majority shareholder with 70% shareholding while the Government of Lesotho remained with 30%.
The monetary value of the loan is identified as $32,825,081.10 in the World Bank's Debtor Reporting System (DRS). See https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=04. China Eximbank also provided an RMB 200 million loan for Phase 2 of the National Telecom Network Project (as captured via Project ID#53047).

📚 Sources & References

http://zfhz.org/english/newsdis.asp?id=1776&stype=26&type=5, http://www.cellular-news.com/story/31066.php
我进出口银行与莱签订优惠贷款协议
ZTE to Enter Lesotho's Communication Industry
Lesotho/China Sign Soft Loan Agreement of M228 Million
FDI Alert - Lesotho Becomes 36th Market For India's Pan-Africa Project
高德毅大使参观我援莱索托通讯网络优惠贷款项目
Budget Speech to Parliament for the 2007/2008 Fiscal Year
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
Chinese Export
Import Bank Assists Lesotho
驻莱索托大使胡定贤在中国政府向莱政府提供优惠贷款框架协议签字仪式上的讲话
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, 2009年进出口银行年报
Budget Speech to Parliament for the 2008/2009 Fiscal Year
Lesotho Structural Policy TA
Govt Urged To Act On Econet
Kingdom of Lesotho Lesotho Structural Policy TA Lesotho State-owned Enterprises: A Country Policy Note, http://global.factiva.com/aa/?ref=APRT000020061113e2bd0000a&pp=1&fcpil=en&napc=S&sa_from=
MINISTRY OF FINANCE PRIVATE SECTOR DEVELOPMENT DEP AR TMENT ST A TE OWNED ENTERPRISES ANNUAL REPOR T FOR THE YEAR ENDED MARCH 2018
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
Lesotho - Telecoms
Mobile and Broadband
China Overseas Development Finance 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.

All Grantees

Government of Lesotho

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