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Govt secures M1 billion loan

by Lesotho Times
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Keiso Mohloboli

THE construction of the 92 kilometre Ha Mpiti-Sehlabathebe road in the Qacha’s Nek district is on course to begin before the end of the year after the government and the Export-Import Bank of China (EXIM) recently signed a M1, 4 billion concessionary loan agreement.

Finance minister Moeketsi Majoro signed on behalf of the government while EXIM Bank was represented by Zhang Chenxu.

A statement released by the Ministry of Finance indicates that construction will begin before the end of the year and 30 percent of the work will be subcontracted to local companies.

The ministry further revealed that Lesotho will only start repaying the loan in 2023 with the interest rate being set at two percent per annum.

“The Minister of Finance, Moeketsi Majoro and Mr Zhang Chenxu, the representative of the EXIM Bank signed a loan agreement for the financing of the  Ha Mpiti-Sehlabathebe Road amounting to CYN700 million which is equivalent to M1, 4 billion,” the finance ministry said.

“This agreement is a follow-up to the Framework Agreement signed between Lesotho and China on 1 March 2018.

“The loan will attract an interest rate of two percent per annum and Lesotho will repay the loan over a 15 year period beginning in June 2023.”

Dr Majoro also revealed that while the construction will primarily be undertaken by Chinese contractors, the government had however, successfully negotiated for 30 percent of the project to be sub-contracted to local companies.

He also pointed that the government had not awarded the road construction tender to a Chinese company but that the terms of the loan allow China to bring its own construction company.

“A concessionary loan is a financial assistance package from a developed country to a third-world country where the financer exports services to the country being helped.

“In this case, it means that as the financer, the EXIM Bank of China will bring a contractor to build the road.

“Therefore, it should be clear that in this case there is no Chinese company which was given a tender by the government of Lesotho. However, we negotiated with them to allocate local construction companies 30 percent of the job,” Dr Majoro said.

Dr Majoro said that the tourism sector must start thinking of ways of taking advantage of the road which will link the highlands of Qacha’s Nek, Thaba Tseka and Mokhotlong with the lowlands and further lead to the Sehlabathebe National Park.

“Since this will be a ring road linking the highlands with the lowlands, the tourism sector should start thinking of investment opportunities, especially for Sehlabathebe National Park which is a world heritage site that the country has failed to fully exploit,” Dr Majoro said.

The Chinese Ambassador to Lesotho, Sun Xianghua said the envisaged road was of strategic importance to Lesotho as it would create jobs and contribute to overall economic development.

“The Ha Mpiti-Sehlabathebe road is one of the major projects that China and Lesotho will implement under the framework of the Forum of China-Africa Cooperation (FOCAC) whose last summit was held in 2015 in South Africa and the next one will be held in September this year in Beijing.

“The impact of this road which is of strategic significance to Lesotho is multi-fold. It will make the travel to Lesotho’s only world heritage park more convenient, efficient and safe, thus attracting more visitors and promoting tourism and job creation in the relevant sectors.

“During the construction, local contractors will be engaged which means there will be skills transfer to Basotho. In addition, a large amount of building materials will be procured locally.

“The road will also facilitate the economic exchange with South Africa,” Dr Xianghua said, adding that China would do everything in its power to increase assistance to developing countries in order to reduce the development gap.

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