By Spy Uganda
Kampala: The Public Accounts Committee of Parliament on Commissions, Statutory Authorities, and State Enterprises (COSASE) has questioned officials from the Uganda Development Corporation (UDC) over the selective bailout of certain companies, which has led to job losses and reduced revenue for others.
This inquiry was initiated by Medard Sseggona (Busiro East), who raised concerns about Nile Hotel International Limited’s UGX 11 billion investment to acquire a 49% share in Igongo Country Hotel and Cultural Center in Mbarara, which lacks an established investment policy. Meanwhile, other struggling hotels have no criteria to qualify for bailouts. Igongo Hotel is owned by Dr. James Tumusiime, the Board Chairman of Uganda Broadcasting Corporation (UBC).
“What is your role in bailing out Pearl of Africa Hotel? We have other struggling hotels, like Protea Hotel in Kololo and Skyz Hotel in Naguru. Why did you prioritize Igongo Hotel? While I appreciate saving Igongo for its cultural value, what is your policy beyond a Presidential Directive, and can you share it with us?”Sseggona questioned.
Joseph Barungi, Manager of Nile Hotel International Limited, explained that the investment in Igongo Hotel followed a presidential directive. This response angered MPs and prompted deeper investigation into UDC’s bailout practices. “Our strategic direction is to focus on green fields where the private sector is not investing. We aim to complement the private sector by conducting feasibility studies and potentially partnering in upcountry hotels,” said Barungi.
Sseggona questioned how Nile Hotel International Limited could commit resources to Igongo Hotel without an investment plan while other significant taxpayers and investors, like former Minister Ringa Okumu and Ssembule Limited, collapsed due to lack of support. “Certain individuals seem to receive help because they know the President, but a statutory corporation should advise the Government or President that there is no policy to support such decisions,” noted Sseggona.
The Committee learned that the UGX 11 billion invested in Igongo Hotel came from savings earned from Kampala Serena Hotel’s 30-year concession, overseen by Nile Hotel, with an additional UGX 5 billion obtained through a loan. Despite this investment, the Auditor General’s December 2023 report faulted Nile Hotel International Ltd (NHIL) for failing to transfer Igongo Hotel’s land ownership to its registry.
Eddie Kwizera (Bukimbiri County) questioned the criteria used to select Igongo Hotel, asking, “How do investors know about these opportunities? Is it because of connections with Barungi or Museveni?” Lucy Akello (Amuru DWR) added, “It would be good to know the partnership criteria. Must I be well-known to catch your attention?”
Patrick Bitonder Birungi, Executive Director of UDC, defended the Corporation’s practices, stating that UDC has an investment policy guiding its decisions, focusing on local raw material utilization, trade balance impact, employment creation, and regional distribution. “Strategic investments can be determined by internally generated projects. UDC does not lend to everyone, given its strategic nature, and does not advertise widely,” said Birungi.
However, Sseggona questioned the transparency of UDC’s investments. “What is so strategic that stops you from being open and transparent? Ugandans need to know the criteria to qualify for support, especially in financially stressed areas,” he said.
Established by the UDC Act Chapter 326 of 1952, UDC is mandated to make long-term investments in strategic sectors of the economy in order to stimulate industrial and economic development and thus spur private sector growth.
