Ugandan millionaire, Mohammed Hamid, a prominent figure in Uganda’s business landscape, is teetering on the edge of losing his renowned Aya Hotel, a consequence of an escalating $160-million debt.
The hotel, a symbol of luxury, is perched on Nakasero Hill in Kampala and offers unrivalled panoramic views of the capital due to its elevated position.
How the Ugandan Millionaire Made His Money
Mohammed Hamid, 47, is the brains behind the Aya Group, a conglomerate boasting annual revenues of $200 million.
His journey to affluence is marked by ventures in diverse sectors such as milling, food manufacturing, commodity trading, and hospitality, establishing him as an influential multimillionaire in Uganda.
Why Hamid started a hotel business in Uganda
The Ugandan millionaire told newsmen that he had travelled extensively across the world and stayed in some of the finest 5-star hotels in the world. His exposure made him identify a gap in the hospitality industry in Uganda.
He said, “The truth is that there are a lot of 3 and 4-star hotels in Uganda masquerading as 5-star hotels. There was no proper 5-star Hotel in Uganda. I was fed up with extremely expensive hotels in Uganda with lacklustre service and outdated infrastructure.”
Hamid believed that Uganda deserved at least one 5-star hotel, so he “got a couple of world-class architects, raised funding and started building. It took us 11 years to complete this hotel and it cost a ridiculous amount of money, but it was completely worth it.”
Mohammed Hamid and his business
The Aya Group, under Hamid’s astute leadership, has flourished, diversifying its interests and contributing significantly to Uganda’s economic landscape. However, the iconic Aya Hotel, a jewel in his business crown, is currently embroiled in financial turmoil.
The hotel sprawls across 32,000 square meters and features 23 floors, 296 rooms, 37 luxury suites, and a plethora of high-end restaurants and bars, coupled with a range of business-centric amenities.
A public notice on the 25th of September disseminated by Armstrong Limited, under the guidance of M/S MMAKS Advocates and ENSafrica Advocates, has put the hotel’s future in jeopardy.
The notice, representing the Industrial Development Corporation of South Africa Ltd., stipulates that unless the outstanding dues are settled by the 26th of October, 2023, the hotel will face a public auction.
What will the auction do?
This auction is a measure to recover a substantial debt of Shs 611 billion ($160 million), originating from a 2007 financing agreement between Aya Investments and the South African financial entity for the construction of the hotel.
Reports say Hamid’s firm challenged this arrangement, citing delays in funds which hindered the hotel’s completion. The magnate also highlighted tax disputes with the Uganda Revenue Authority and logistical impediments due to Uganda’s geographical limitations.
Aya Group and its Legal Battles
The hotel has been a focal point of legal battles, with recent rulings by the Court of Appeal affirming the validity of arbitration processes and obstructing Aya Investment Limited’s efforts to contest the payment decree of Shs 611 billion ($162.1 million) to IDC of South Africa Limited.
This scenario unfolded following last year’s directive by the Bruce Collins QC Tribunal, which necessitated the compensation.
Historical data reveals that ten years ago, a significant Shs 305 billion ($80.9 million) was allocated by the South African lender to Hamid, a sum that remains unsettled. This unresolved debt has intensified the disputes, with Justice Stephen Mubiru endorsing IDC’s proposal to enforce the award as a High Court decree in Uganda, thereby intensifying Hamid’s predicaments.
Hamid’s attempts to secure relief through Uganda’s legal system have yielded no success.
Managerial turbulence at Aya Hotel
Aya initially partnered with Belgium’s Carlson Rezidor Hotel Group in 2017. Reports say the alliance dissolved within six months. It was later 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 since early this year, with whispers suggesting a potential majority takeover by Libyan firm LAICO.
What you need to know
According to Forbes in 2015, Hamid was the second-richest African under 40, after Tanzanian multi-millionaire Mohammed Dewji.
He is currently the 2nd wealthiest individual in Uganda, with an estimated networth of USD$1.259 Billion.
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