Ugandan multimillionaire Mohammed Hamid faces loss of five-star hotel over $160-million debt

Mohammed Hamid, the influential Ugandan multimillionaire, is at the precipice of forfeiting his iconic Aya Hotel due to a mounting $160-million debt. Nestled atop the scenic Nakasero Hill in Kampala, the five-star property boasts unparalleled 360-degree views of the capital, owing to its elevation of 1,240 meters above sea level.

The expansive hotel stretches over 32,000 square meters, consisting of 23 floors, 296 rooms, a choice of 37 luxury suites, alongside a mix of high-end restaurants, bars, and an assortment of business-focused amenities.

On Sept. 25, a public notice, circulated by Armstrong Limited – court-appointed bailiffs and debt collectors, under instructions from M/S MMAKS Advocates and ENSafrica Advocates (representing the Industrial Development Corporation of South Africa Ltd.), declared that unless all outstanding dues were cleared ahead of Oct. 26, 2023, the hotel would be presented at a public auction.

The auction is aimed at recouping a hefty Shs 611-billion ($160 million) debt, which roots back to a financing agreement inked in 2007 between Aya Investments and the South African financial institution for the hotel’s construction. Hamid’s Aya Investments has contested the arrangement, claiming that delayed funds impeded the completion of the hotel. The tycoon further pointed to tax disputes with the Uganda Revenue Authority and logistical challenges tied to Uganda’s geographical constraints.

Legal tussles have enveloped the property. Recent judgements by the Court of Appeal have upheld the legitimacy of arbitration processes, thwarting Aya Investment Limited’s attempts to appeal against the payment decree of Shs 611 billion ($162.1 million) to IDC of South Africa Limited. This follows the Bruce Collins QC Tribunal’s order last year that mandated the payout.

Records indicate that a decade ago, a substantial Shs 305 billion ($80.9 million) was handed over by the South African lender to the businessman, an amount which remains unpaid. This debt has been a source of contention, and Justice Stephen Mubiru approved IDC’s motion to solidify the award as a High Court decree in Uganda, further complicating matters for Hamid.

The business magnate’s endeavors to seek reprieve through the local judicial system have so far been unfruitful. The hotel’s management history has been equally tumultuous. Initially partnering with Belgium’s Carlson Rezidor Hotel Group in 2017, the alliance dissolved within six months, replaced briefly by South Africa’s Sovereign Hotels. By 2018, the American giant Wyndham Hotels and Resorts took charge, but this too was short-lived. The hotel, previously christened ‘Pearl of Africa’, has been operating as WIN 5 Hotel & Spa from early this year, with whispers suggesting a potential majority takeover by Libyan firm LAICO.

Hamid, 47, is the founder of Aya Group, a $200-million (annual revenues) Ugandan conglomerate with interests in milling, food manufacturing, commodity trading and hospitality.