• Sun. Jun 11th, 2023

UGANDA, Kampala | Real Muloodi News | Muhammed Hamid, the owner of the Aya Hotel in Kampala, started his own business in the early 1990s after leaving his elder brother’s business with experience, capital, and confidence.

Just ten years later, he was bidding to build the second-largest hotel by room number in Kampala, which would arguably be the most magnificent in the capital.

Despite its grand opening eight years ago, AYA Investments Uganda Ltd, the owner of the Pearl of Africa Hotel, is now undergoing liquidation. Meanwhile, the hotel itself has undergone a subtle rebranding and is now known as the Win 5 Hotel and Spa.

Liquidation Process

In February 2021, the liquidation process of AYA Investments Uganda Ltd commenced, and the court-appointed Robert Mugabe, the Director of Insolvency and Receivership at the Uganda Registration Services Bureau (URSB), as the official receiver, and subsequently, the provisional liquidator.

A receiver is charged with collecting or receiving revenues from the company’s activities and manages it to clear outstanding financial obligations of the company that is winding up, while a liquidator manages the winding up of the company, including selling off the assets to settle the outstanding debts.

These appointments are made after either the company itself or its creditor proves before the court that it is no longer in a position to pay its financial obligations, including suppliers, service providers, and government taxes.

Creditor Claims

In addition to the challenges faced by AYA in building a five-star hotel, the company is also facing significant debt issues.

According to recent reports, at least 10 creditors have filed claims at the URSB seeking to recover unpaid debts totalling over $80 million.

The claims are part of a liquidation process being managed by Mr Robert Mugabe. While the identities of the creditors have not been revealed due to client confidentiality, it is believed that the claims include an outstanding loan of around $80 million that was advanced to AYA by South African lender, Industrial Development Corporation (IDC), for a hotel project around or before 2007.

Other claimants include utility companies such as Umeme, statutory bodies, and several companies that have previously sued AYA over its failure to pay for goods and services supplied.

One of the longest-running claims is by meat processing company Fresh Cuts, which says that in 2017, AYA was supplied with assorted meat products worth USh44.9 million which it failed to pay for.

Through Haguma Law Chambers and Advocates, Fresh Cuts secured commitments by AYA to pay, but it didn’t fulfil the pledge.

On September 12, 2018, Mengo Chief Magistrate Sarah Mbonye directed Aya Investments to clear the USh44.9 million debt plus a 25 per cent per annum interest from the year of default to the year of completion of payment, with allowable tax deductions of USh10 million.

After failing to enforce this directive against the hotel owner, Fresh Cuts asked the court in 2021 to declare Aya Investments bankrupt following the expiry of the time agreed to clear the date as per the Insolvency Act.

In 2018, the Kampala Capital City Authority (KCCA) threatened to close the hotel for failure to pay local hotel tax that had accumulated to almost USh34 million.

The hotel was requesting concessions like paying in instalments, which KCCA rejected.

At the same time, the electricity bill was rising, and by 2021, the distribution company, UMEME, was demanding USh800 million and resorted to power disconnections to force the company to pay.

Last year, Sanlam General Insurance sued Aya Investments for breach of insurance contracts. Court ordered the company to pay a total of about USh175 million to Sanlam.

The process of analysing the creditors’ claims is expected to take two weeks before payments are sanctioned.

However, payments will be prioritised to regulators such as the Uganda Revenue Authority (URA), followed by creditors with the highest debt portfolio.

AYA has yet to comment on the matter.

Ambitious Investment

The expected high demand for hotel rooms ahead of the Commonwealth Heads of Government Meeting (CHOGM) in Kampala in 2007 saw the government offer incentives to private investors to cover the gap.

The urge made the government give AYA the 14 acres of land that formerly housed Uganda Broadcasting Corporation (UBC) and other Ministry of Information facilities at Nakasero Hill in the central business district in 2005.

Experts say that with or without cash at hand, it was too ambitious a move to expect to put up a five-star hotel in such a remote location.

Many argued that the money could have been better spent improving the infrastructure of the region to attract more tourists and investment.

Despite the criticism, the government went ahead with the project, and construction began in late 2021. The project was expected to take at least three years to complete, but it was soon clear that things were not going according to plan.

Reports of shoddy construction work, delays, and cost overruns started to emerge, and the government was forced to suspend the project in mid-2022.

The public outcry was fierce, and many demanded an investigation into how the funds were allocated and who was responsible for the mess.

The investigation revealed widespread corruption and mismanagement in the project, and several officials were arrested and charged with embezzlement and other related offences.

The public was outraged, and the government promised to take swift action to punish those responsible and ensure that such a scandal would never happen again.

Hamid’s AYA Empire: A Diversified Business Portfolio

Hamid, a Sudanese businessman, is the founder of AYA Group. He began his entrepreneurial journey in Uganda in the early 1990s after leaving his brother’s company, Pan Afric Impex.

Hamid’s AYA Group is involved in several sectors, including hospitality, baking, mining, transport, real estate development, and charity work.

AYA Investments U Ltd owns the Pearl of Africa Hotel, also known as Win 5 Hotel & Spa, and Hamid was ranked second on Forbes’ list of the richest African men under 40 in 2015.

The AYA Group also includes Aya Bakery Limited, Aya Biscuits Limited, and Aya Foundation Limited, a charity that provides medical care to needy children.

In addition, the AYA Group has Aya Mills Limited, Fifi Transport Limited, Pan Afric Commodities Limited, and Aya Mining Limited under its umbrella.

Hamid also owns Aya Mohammed Trade Plc in Dubai, United Arab Emirates, and Aya Property Developers Inc in New York, USA.


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