REVEALED! How UDC sealed shs9bn shares deal in Igongo hotel

On February 6, 2023, Uganda Development Corporation (UDC) had good news to tell Ugandans about how far it has gone in realizing its vision of investing in hotel and conferencing facilities in strategic locations in the country.

UDC, an investment institution established as a wholly owned government entity with the mandate to facilitate the industrial and economic development of Uganda first existed in 1952.

It went into a coma in 1970’s and late 1980’s when the NRA/M decided to privatize and liberalize the economy, and by 1998 it had died and buried.

Just like a common saying where ‘the seed must die and be buried for it to grow into a beautiful plant’, UDC resurrected in 2016 (by an Act of Parliament) as the investment arm of the government mandated to promote and facilitate industrial and economic development of the country.

And going by current developments, maybe Ugandans can hope the new UDC will turn around the country’s economic fortunes.

IGONGO 9BN STAKE

On Feb. 6, 2023, revealed to have inked a shareholder agreement to acquire a stake in the Igongo Cultural Center and Country Hotel, located 12 kilometres from Mbarara city centre on the Mbarara – Masaka highway.

The vision bearer behind Igongo is Fountain publishers boss James Tumusiime.

We have now learnt that UDC reportedly acquired stakes worth Shs9bn in the hotel valued at about Shs40bn.

UDC’s portfolio interests in Igongo will be managed by Nile Hotel International Limited (NHIL), a company fully owned by UDC.

NHIL flagship concession is the land & buildings currently occupied by Kampala Serena Hotel, a five star hotel. This facility was leased / concessioned to TPS (U) Ltd (Kampala Serena Hotel) in 2004. The leased facility comprises 6.2 acres of land, a Conference centre and Hotel facility.

NHIL plans to grow its portfolio by investing in additional hotel and conferencing facilities in strategic locations in the country.

“This [Igongo] is a strategic location for tourism, conferences, accommodation facilities and events,” UDC said after inking the deal.

It has also allayed fears raised by a section of skeptical Ugandans.

“The acquisitions are important and mark a policy reversal, a turnabout by a system that previously sold all government-owned hotels. I hope this reversal is informed by sound policy, transparency & robust economic considerations – not an insidious fleecing of the taxpayers,” observed human rights activist Nicholas Opiyo.

But UDC has assured him: “UDC gives you assurance that all its investments are guided by its strategic plan and due diligence is carried out before investing.”

UDC has also been encouraged to invest in more infrastructure and float shares, all Uganda Hotel facilities and national parks for the sake of the country’s tourism potential.

It has also been implored not to drive out the Igongo founder.

“We work with the private sector and not compete with them or drive them out of business,” UDC further assured.

WHAT WENT WRONG AT IGONGO TO WARRANT UDC BAILOUT?

We have learnt that the founder of Igongo had financial obligations to settle.

We are told this was related to money in sums of about Shs34bn, the founder acquired from a wealthy Ugandan businessman of Asian origin to set up the facility.

The founder managed to repay but the hotel income wasn’t sufficient to offset this financial obligation.

We are told at some time, separate property had to be sold including 2 square miles of land but still a balance of about Shs7bn remained.

We are told this financial obligation affected the founder’s other businesses like Fountain.

To balance the books, about 19 workers were laid off at Fountain and there are even whispers in the corridors of the Ministry of Education that Fountain, the publisher of educational material, literary material and maps, may be behind schedule as far as delivery of new secondary curriculum books is concerned.

WHO SEALED UDC 9BN DEAL?

With all this going on, UDC came to the rescue with shs9bn and Igongo founder had no option but to kowtow in order to offset the Asian businessman’s financial obligation.

But who approved the deal? UDC is supervised by the ministry of Trade, Industry and Cooperatives (MTIC).

The ministry of Finance has a final say on any investment project— Public Private Partnership (PAP), acquisition, and others—the government of Uganda undertakes.

This implies that for UDC to successfully enter into a shareholder agreement to acquire a stake in Igongo, it must have got a nod from the Finance ministry.

It goes without mention that a top official at the Finance ministry has been romantically linked to one of the key decision makers at Igongo to an extent of planting a live seed in her.

Is the UDC-Igongo deal linked to horizontal shenanigans? This is a story for another day.

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