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How government decision to build a large international convention centre in Munyonyo has been its best
THE LAST WORD | Andrew M. Mwenda | Recently, I had a debate with some Ugandan friends on the decision of government to build an international convention center in Munyonyo in partnership with Sudhir Ruparelia. Uganda will host the Non-Aligned Movement (NAM) summit in January 2024. So far, 88 heads of state and government have confirmed attendance. The country already has an international conference center in the middle of Kampala at Serena Hotel. However, government felt that for purposes of NAM, the country needs a big and new one. The new convention center will have a main hall hosting 3,800 people, with 12 breakout session rooms. It will cost $47 million to build. Let me declare a conflict of interest: Sudhir is a friend.
Government through Uganda Development Corporation (UDC) entered a joint venture with Sudhir on a 50/50% basis. Each party contributed $10 million as equity. Government lent the consortium $27 million.
My Ugandan friends were angry that government is “giving Sudhir money”. They argued that Sudhir should have borrowed to build it. For them, government will never earn dividends from this investment.
To justify this, they said government co-invested with Sudhir in Speke Commonwealth Resort Munyonyo with $8 million for 25% shares in 2007 but has never earned dividends. They said the consortium will never repay the loan of $27 million.
I hold government of Uganda in contempt because it often fails to make cost-efficient decisions. However, I think this was their best investment decision. Why? Government wanted a large international convention center. It could have been for reasons of national prestige to “show-off”, which is understandable. But the convention center could also be a basis for promoting conference tourism in Uganda.
The government of Rwanda, perhaps the most developmentally serious on our continent, did exactly this with Kigali Convention Center and the attached Raddison Blue Hotel. Kigali is aggressively promoting conference tourism and succeeding.
An international convention center of the size Uganda is building in Munyonyo is not attractive to private investors. This is because conference tourism in not big enough to make such investment profitable. That is reason why no private investor has ever built one in Kampala and Sudhir would never go to a bank to borrow money to build such a white elephant.
Besides, Uganda has an international convention center at Serena. The Aga Khan who leased former Nile Hotel refurbished the hotel and has made lot of money from it. However, he has never refurbished the convention center part. Today it has stinking toilets, old furniture, creaking doors and glass windows filled with mold.
Yet a large international convention center can become profitable if there is world-wide marketing of it. However, no private investor can afford such a cost. This market failure creates a role for government.
A big convention center may not be profitable to private investors but it may be needed by the country to host big conferences which are of political importance or for reasons of prestige.
Government also spends money marketing Uganda as a destination for tourism. It can, like Rwanda, aggressively promote Meetings, incentives, conferences and exhibitions (MICE) tourism as a strategic goal. The benefits of growing conference tourism in the wider economy will far exceed the losses incurred on the profit and loss account of the convention center.
When conference tourism grows, an international convention center like the one in Munyonyo can become profitable. This would make it possible for the consortium to make profits, repay the loan and even pay dividends to government. It would also incentivise Sudhir to buy government shares since the state is not in the business of doing business. Even here, the state would have indirectly subsidised the convention center by incurring the cost of marketing Uganda abroad as a destination for conference tourism. This is what strategic intervention by the state entails.
Munyonyo resort was the best place to place for this convention center because it is out of town and is connected to Entebbe International Airport via a modern expressway. This means we don’t have to close down the city with its chronic traffic jams, not to mention giant crater-like potholes in the roads when international guests, especially 88 heads of state, visit. The resort has 475 rooms including 59 presidential suites. Built on 105 acres of land, it has two swimming pools (one of them Olympic size), 20 other conference rooms and halls, horse riding, water sports, jogging tracks, etc.
It makes a lot sense for government to ride on these benefits by placing a convention center there. Finally, because a private investor already runs the resort, government will not need to spend more money on maintenance of the convention center. Thus, even if the consortium did not pay dividends or repay the loan, government has limited its liability while retaining an investment with many aforementioned potential benefits to the wider economy and society.
Besides, any discussion of this matter has to consider the alternative options and the tradeoffs involved. The alternative would have been for government to find land, build an international convention center with an adjacent hotel and put many other facilities in a place. It would also have had to ensure it causes the least traffic crisis in Kampala during major international conferences. Anyone knowing our government would predict that such an effort would have taken 30 years, heightened quarrels and recriminations and cost not less than $2.5 billion. I say this because even the super-efficient and uncorrupt government of Rwanda spent almost 12 years to build an international convention center at a cost of $300m.
Recently, while at lunch with him, President Paul Kagame told me the story of myriad frustrations he faced and the decisive interventions he had to make to ensure that the project succeeds.
The hostility to the Munyonyo project is mostly driven by “nugu” (envy). Many Ugandans feel unhappy when they see a Ugandan doing many great things like Sudhir is doing. It even hurts them more when what looks like state patronage going to a person who is rich already. Yet Sudhir never sought to build a convention center. He was approached by government to do so because they needed it urgently. The request was made in November 2021 and took nine months to negotiate the final agreement, which was signed in August 2022 delaying commencement of construction. Even today, government has not paid the final $10 million, on a project that is supposed to be completed in November 2023. Imagine Uganda is turning around this project in two years at $37 million. Unbelievable!!
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amwenda@independent.co.ug
Andrew Mwenda, Andrew Mwenda, Andrew Mwenda! Honestly, this is not you! It can’t be you, Andrew Mwenda-or is it you, now intoxicated on power and prestige? I have been a fan of yours, and I mean way back when you were the angry boy of Monitor who threw caution to the word, no holds barred, you went for the kill each time. Leaving me and many others awed by your incisive -albeit temperamental outbursts, I prayed that you remain true to yourself. I was glued to your talk shows and bought the paper-if not for any reason-to read your captivating analyses. Now, now, now ,see how you are becoming a shadow of your own self? Nungu, so you discern?
Let’s look at your argument and I just might convince you that it is not necessarily ‘nugu’ (envy and malice) but concern for public resources not being prioritized-if not being squandered outright! Lets first analyse nugu: is your average person wont to envy the better off? You bet! It is not a Uganda thing, it is a human trait. So there you are spot on-Ugandans envy the likes of B Muwonge, Drake Lubega, Sudhir, Kirumira, Ham, and just about all the loaded lot of Uganda. We smile when -like omugagga Kirumira was made to sweat at a police station just the other week. Listen, it is a natural instinct to envy one who is better off-that is what motivates us all. Going a bit deeper, could we be envious of Sudhir on account of being a Muyindi? Some yes, but is that how people generally feel about Mandela, a Ugandan of Somali origin? Do people have nugu for Mama Fina, not one bit-we just adore her. Why? One does not associate questionable dealings with these two individuals. Conversely, when Basajjabalaba, a Ugandan born and bred in Ishaka, Bushenyi in his heydays got cash bonanzas from our loving generous Muzei, there was a public outcry. And why was this so? Right-thinking Ugandans wondered why billions were being dished out to a man who clearly didn’t look like he needed any support. With those few examples, we can eliminate racism here.
Now, what is it about putting up a Convention center -and of that size -in Munyonyo, especially at this time that would not go down well with the majority? What particularly sounds not quite right is when a ‘consortium of Sudhir and govt’ is lent money by the very same government from the left hand to the right. It also sounds dubious that a colossal amount is being forked out. Your average person may wonder what the citizenry has got out of Munyonyo. You mention the ‘prestige’ we could derive from such a building. That, to an average person, is akin to a ‘well-meaning’ neighbor whose kids are out of school for school fees yet invites you to a lavish party with barbecue and all. Do you respect him or wonder at his inanity? It is a time when observers point out the growing divide between haves and have not. It is also a time when we aren’t quite recovered from the Mabbati scandal -a clear albatross on the neck of this government. You add salt to the wound by reminding us that ICC is now run down! Shame on all of us as the late Idd Amin Dada would turn in his Saudi grave.
Lets us paint the context well for the matter to sink well in our heads. In 2018, PM Modo of India struck by nostalgia offered to build Uganda an international conference centre. It was estimated to cost 56 billion then and was meant to be situated by River Nile, Jinja-mostly owing to the Indian premier’s emotional attachments. (https://realmuloodi.co.ug/uganda-loses-ush56-billion-grant-to-build-international-convention-centre/) The project stalled because that is typically how we do things-what the muganda calls ‘kifuula nenge’. It was supposed to be a grant-free crisp dollars! Look and behold, by allowing politicians to meddle and technocrats to scheme, the project fell flat on its face! We simply seem to have a penchant for doing what we shouldn’t be doing and not doing what we should be. Not convinced,? Lets us travel a bit further down memory lane. It is Sunday, June 6th 1971, and no other than General Idd Amin is opening the ICC, now derelict. Andrew Mwenda, before you were born, the ICC ,a futuristic structure then, and a futuristic structure still was put up. Its elegance brought pride and prestige. It was a beauty to behold! To put it in context, 50 plus years after its construction, if there is a building in Kampala, which competes favorably with the aesthetics of the Kigali Conference Centre, it is arguably the now dilapidated structure that once stood tall and proud as the hallmark of Kampala. You sweep an all-important issue under the carpet- by pointing out that the lucrative hotel wing was leased to Agha Khan and nobody had the sense to remember that the two were one complex and winner ‘takes it all’ had to apply. The man renovated the hotel and has minted money from it, you rightly remark, but the ICC built strategically as part of the complex was left to rot.
Ok, fast forward after the light break.
So you believe Munyonyo being way out of the city is convenient as there is no traffic jam? One could argue as well that ICC is not in the city centre either and dignitaries would cross from Entebbe through Mukwano road upto ICC with minimum convenience to motorists. In any case, the beautiful Kigali ICC, you make reference to is also not miles out of the city but strategically overlooks the highway from Remera to town center. Whatever the case, if we go by your argument, should we abandon ICC? This magnificent structure has a sitting capacity of well over 1000 people. Think about it, while there may be some international meets that bring together over 3000 people, this is the exception rather than the norm. I doubt that NAM brings together that number of delegates or will it this time?
Let’s get back to the deal and see if some elderly folk back in Fort would believe you. I see you on your knees explaining to the old lady, that ‘Jajja, you know what, the government has prudently joined hands with a certain man to build a center-the first of its kind, You know this government is now doing some smart thinking like Kigali, Akiiki. It will cost only 140 billion about the cost of Mulago Hospital. The old lady is looking on intently, she coughs -been sick for a while but can’t afford medication. Tells off her grandson who is rowdy and distracting her. You continue ‘Don’t you see how smart our government has suddenly become, grandma? ‘ You see, it is now so smart, just imagine Jajja, the government will get some small amount-well enough to build five Buhinga hospitals and lend itself and the other man-an investor with many, many hotels and buildings and ….at that moment, I suspect she spits, and says Grandson, do you have an interest in the thing? I dont quite get it…
Hahaha…. Mwenda, how come I don’t have nugu on you…yet you’ve managed to reach the pinnacle…in terms of business journalism? The answer is simple, I’ve been a witness to your acclaim… and if I wanted to “replicate” an Andrew Mwenda, I know where and how…… what do I mean, transparency and a level playing field. If government wanted to do business with its local investors (PPP), the ppda rules would apply. Let the project be advertised, let there be open bidding… and let the highest (best) bid carry the day…..I think that’s how the “nugu” thing would be controlled. What Ugandans are finding foul play is, that the same “investors” are awarded the juicy contracts all the time without a hustle…. The same “investors” are awarded public funds in a country that “privatized” all its public companies in an effort to reduce on its losses.
Mwenda, what the so called “nugu” people are saying, “we aren’t foolish not to understand that you’re stealing from us.”
Ugandans are suspicious of their government double-crossing them. That some dubious government personnels hummer out deals with unscrupulous business vandals. If Uganda is very poor at doing business, at least, it should do the building and let it rent out the management…in this case, the “sharing” is only on the proceeds and not the ASSETS.
1.Lets bear in mind that once a country has been nominated to host a conference ;there were other contenders who lost the bid to host it and on standby and probably hoping against all hope that Uganda fails to host the conference such complains ts against Sudhir makes their day.
2.Some conferences are 100% paid for by the funders so all Uganda needs is to ensure that all the money for accommodation and air tickets are processed by Ugandan firms.
3.Is it difficult for the government to tell how much we shall receive?what happened to transparency?I have attended smaller conferences were the host is allocated about 800 million to cater for our accommodation,food,transport, air tickets and allowances.
4.Does Sudhir have no PR team?He employs Ugandans,pays taxes cant he just provide such basic information so that we can breath?
5.After COVID,most conferences are held online or physically we should also factor that.
6.No serious business person has protested this government business partnership with Sudhir so why is every little Tom and Harry concerned?
7. We lost it long ago when we privatized most business of course Sudhir will smile all the way to the bank;Speke Resort is a one stop center and so convenient for conferences actually Sudir should partner with the owners of the private airfields in Kajjansi so that tourist can easily fly to tourist destinations.
8.Ugandans dont like Sudhir that much because we believe that the rich should be more kind towards the poor instead; when he owned Crane Bank he took over their property because they defaulted on loan repayments he could have explained to Ugandans that he also borrowed money from point x and his property was also at risk of being attached.
9.Rajab;have ever been to Speke Resort?Even the Horses there speak English.
10. With partnership in business there is always lack of transparency especially if one party has an advantage over the other;In this arrangement;perhaps government should appoint an official to follow up the business that Munyonyo gets and the percentage we should receive.
12.The Social class you belong to shapes your personality;Back then Andrew would hang out with people who were poor and complained alot they actually made him wild.
13.The men are to blame for the DNA craze in Kampala;There is alot of pressure among men to marry pretty and light skinned women in that they all graze from the same field i know Kampala women who are on their 3 divorce and Evey man still wants to marry them when you see them smiling in their wedding gowns you may think they are virgins .In Kampala;the definition of an outgoing, kind and fun to hang out woman is one who easily opens her legs not one who goes to church and is still a virgin.