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Chogam spurs hotel construction boom: the Ugandan capital is abuzz with both the proposed and ongoing construction of luxury five star hotels. But the flurry of activity surrounding the numerous projects has come at a price. African Business' Stuart Price in Kampala investigates.

There is a new investment trend emerging in Kampala for those with enough financial clout. A plethora of already under construction and approved hotel developments pepper the city centre, and it is perhaps just in time. Towards the end of next year, for the first time in its history, Uganda will host the Commonwealth Heads of Government Meeting (Chogm).

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The week-long gathering is expected to host over 50 heads of state along with a small army of some 4,000 delegates and support staff. Such an influx of VIP visitors requires a massive building programme of top-end accommodation and the surge in hotel constructions to meet this demand appears to have begun in earnest.

But some people are wondering what will happen after the 'Lord Mayor's Procession?' The questions being asked is: will demand meet supply and does Uganda really have the potential--in both business and tourism circles--to fill so many top-end hotels after the Chogm summit?

Aside from the already existing Kampala Sheraton, Speke Hotel, Grand Imperial, and Hotels Equatoria and Africana, expansion work is taking place at Speke Resort Munyonyo on the shores of Lake Victoria.

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The government entered into a joint venture with business tycoon Sudhir Ruparelia's Meera Investments to facilitate the construction of the $30m 'Munyonyo Commonwealth Resort,' which is earmarked to accommodate the visiting heads of state and where the majority of Chogm proceedings are expected to take place.

The environment bordering Lake Victoria, however, is extremely sensitive, with even the slightest encroachment having potentially negative consequential effects on the ecosystem.

Waiswa Ayazika, the environmental impact assessment coordinator at the National Environment Management Authority (NEMA), told African Business that an environmental impact assessment (EIA) was carried out in relation to the proposed expansion work at the 1,800sq.m Munyonyo plot and a permit granted to carry construction activities within a regulated and strictly defined zone.

"The EIA found that the proposed plans needed access to wetlands as the resort is planning to build a floating restaurant. In order to eventually access that restaurant, one has to go through the lake shore so for that a permit was given with a set of conditions."

According to Ayazika, the land designated for the construction of the new rooms, presidential suites and enlarged facilities on the lake shore is existing land already owned by Speke Resort, and not new land allocated for this purpose. "All that NEMA has done after carrying the assessment is grant the permit to access the lake shore," he said.

Sacrifices had to be made

Elsewhere, other major projects in central Kampala have been given the go-ahead to be built. Fifteen acres of prime land in Nakasero, adjacent to Uganda's State House, has been 'donated' by the government to Sudanese-owned AYA Investments, which plans to build a $90m three-tower hotel in time for the summit.

But the new investment comes at a price. The land holds a degree of historical significance. It is the original site of the Uganda Broadcasting Corporation (UBC), the country's pioneering TV station, which has been based there for 43 years.

Other casualties include the Nakasero School of Nursing and Midwifery, a handful of offices for presidential advisers and the Departments of Information, Ethics & Integrity and Economic Monitoring, which until recently shared the site with UBC. All are being relocated in order to make way for the development.

Former state minister for information and government spokesman, Dr James Nsaba Buturo, whose own office was sacrificed to make way for the venture, commented on the donation of the plot to AYA that "the policy of the government is to put in place incentives that can attract investment. In light of this, they did not pay for that land".

Eyebrows were also raised over the close proximity of this development to President Yoweri Museveni's official residence. A high-rise hotel would provide a more than adequate platform for the prying eyes of intrusive neighbours and has left some wondering about the logic behind giving such a project approval considering Museveni's attention to detail when it comes to security.

In addition, Shimoni Demonstration Primary School, one of Uganda's oldest and biggest mixed primary schools in Uganda, with 3,400 pupils, and which also houses teacher training facilities, has been sacrificed for another five star project by the Saudi Arabian tycoon, Prince Alwaleed bin Talal bin Abdul Aziz Alsaud. The Prince is owner of Kingdom Holding Company and ranks among the 10 richest men in the world.

Local press reports indicated that the Prince will not have to pay for the land or for the relocation of the school and teacher's college. That is expected to cost the government somewhere in the region of $9m. And coupled with the $6m cost of relocating UBC to Kololo, another suburb of Kampala, some may argue it is a high price to pay for making Uganda "attractive to investors".

Construction deadlines

The development projects slated to be completed in time for Chogm have a little under a year to meet an allotted completion deadline. Although they should be completed ahead of schedule, most likely by November, an additional period of six months prior to the summit is needed by the various hotels to recruit and train staff and for the facilities to go through a grading system.

Closest to completion, however, is the soon-to-be-open Kampala Serena Hotel, part of the chain which has similar luxury accommodation in Kenya, Tanzania and Mozambique. Slated to open at the beginning of August, the "152-room world class hotel will showcase the cream of Ugandan culture while delivering the ultimate in personalised service, international cuisine, social style and business reliability".

It will be built as a complete revamp of the former Nile Hotel that occupied the site. According to James Bahinguza, the general manager of Tourism Uganda, "many of these hotels are not being constructed because of Chogm, but will be here for the long term. Serena, for example, was planned well before Uganda was confirmed as the host for next year's summit."

A gift of nature

A country 'Gifted by Nature', as a recent government publicity drive put it, Uganda has enjoyed steady growth in its tourism industry over the last decade with over half a million people visiting as tourists in 2004 and around 600,000 expected this year according to Bahinguza. With these projected figures, the industry needs to expand on its current available facilities.

"The investment in the hotel industry here in Uganda is very good, very, very good. We are now seeing people investing in tourist hotels such as Serena, and they know how to look after tourists, they know their minds, what is value for money and they will deliver that product."

Bahinguza also insists that it is more of a case of looking beyond Chogm, in spite of the global focus and attention it will bring Uganda, and at the expectations of positive developments in the country's own image in terms of peace and security.

"I think by the end of 2007, the northern rebellion which has impacted negatively on our tourism industry and Uganda's image abroad will have been resolved. If this happens, the numbers of visitors here, in my opinion, could easily double."

If this were to happen then Uganda will certainly need the increased capacity. "The hoteliers know that after 2007 there will be many hotels of good quality. I do not agree with these people who ask with cynicism 'what will happen to all these hotels?'"

Quoted on Uganda Hotels, a website which monitors all major developments in the Uganda hotel industry, Ismail Sekandi, the executive director of the Uganda Hotel Owners Association (Uhoa), said: "Uganda missed out on hosting international conferences in the past because of a lack of capacity to satisfy demand. We believe the summit is a good opportunity and we are going to exploit this opportunity."

He conceded that the cost has been high but with the current new developments and upgrading, Uganda would soon be in a position to compete favourably with its neighbours.

In spite of the controversy surrounding the apportion of prime plots of land in the city centre, the resultant displacements and high price tag of relocation, the construction of the various hotels has seen new employment for hundreds of people.

Serena, for example, has employed some 800 people during its construction and will hire many more in the long term once it is up and running.

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The same can be said for both the AYA Investments project and the Shimoni development.

For the time being, though, the frenzy of activity on building sites across town is being carried out at a quickfire pace.

It is now a race against the clock to get the hotels and facilities ear-marked for the Chogm meeting finished on time and up to the international standards that such a high profile summit expects.
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Title Annotation:Uganda
Author:Price, Stuart
Publication:African Business
Geographic Code:6UGAN
Date:Jul 1, 2006
Words:1482
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