President Museveni has temporarily stopped the sale of the Pearl of Africa Hotel (formerly Aya) due to its Shs647 billion debt to the Industrial Development Corporation of South Africa. In a letter dated May 1, Museveni requested the halt of the auction to allow time for a meeting with the South African lender.
Museveni stated in his letter that Mohammed of Aya Investment (U) Ltd Group had approached him about the impending sale of the hotel. The court had sanctioned the sale after several rulings in favor of the South African corporation.
Museveni emphasized that the Pearl of Africa Hotel is a strategic investment, which received support from the Ugandan government through land allocation and other benefits. He expressed the government’s desire to intervene and ensure the debt is paid without auctioning the hotel. Museveni directed the auctioneer to stop the sale until he could meet with the South African representatives. He also instructed his principal private secretary to organize the meeting within the month.
As of the latest update, it is unclear if the meeting between Museveni and the South African company has taken place. Timothy Kanyerenzi Masembe, the managing partner of MMAKS Advocates, the law firm representing the South African company, confirmed the authenticity of Museveni’s letter but declined to comment further due to client-advocate confidentiality.
The hotel was scheduled for auction on May 3 by Armstrong Limited, the appointed bailiffs, on behalf of the lender and law firms M/S MMAKS Advocates and ENSafrica. The debt owed by Aya Investment has grown from about Shs316 billion to the current Shs647 billion.
From August 13, 2007, to April 21, 2017, Aya Investments (U) Limited and the Industrial Development Corporation of South Africa engaged in multiple Financial Credit Agreements. These agreements were intended to fund the development of the Pearl of Africa Hotel on Nakasero Hill in Kampala. The total principal amount disbursed across 20 instances under six Financial Credit Agreements was $81,765,318 (Shs305.6 billion).
However, a rift developed between Aya Investments and the South African lender due to Aya’s failure to comply with the terms of the Financial Credit Agreements. This resulted in several legal battles, ultimately leading to the hotel being put up for auction.
According to sources close to the President, the intervention by President Museveni aims to resolve the debt issue without resorting to the auction, preserving the strategic investment for Uganda. Supporters of the government’s action have claimed the government’s involvement highlights the importance of the Pearl of Africa Hotel and the need to protect significant national assets from financial mismanagement and legal disputes.
