Investor demands Shs3.1 trillion for Owino market

Women sort groundnuts at St Balikudembe (Owino) Market in Kampala on March 31, 2020. Government is prepping to fight a multi-million dollar claim by a Yemeni businessman over a botched deal to develop the market. Photo / File.

What you need to know:

  • The money claimed by the Yemeni businessman is more than what was allocated to key sectors in the recently concluded budget by the House.

The government is prepping to fight a multi-million dollar claim by a Yemeni businessman at the International Centre for Settlement of Investment Disputes over a botched deal to develop St Balikudembe Market (Owino).

Abdulmajeed Qasem Othman Ahmed and his two companies, Al-Ameri for Engineering Trading and Contracting Company and Al-Ameri Intel Company East Africa Constructions, want to be paid more than Shs3.1 trillion ($860m) as compensation for loss of business in the market deal.

In an anticipated major showdown, government through the Justice Ministry has advertised for services of private law firms to help it fight off the claim. Law firms are expected to have expressed their interest by June 2.

Government was given a 90 day ‘cooling period’ from March for negotiations with a possible further three months “provided that the negotiations are conducted in a constructive manner and with the appropriate guarantees showing the good will to reach a concrete and binding agreement”.

It is not yet clear if the negotiations have commenced but government’s procurement of services of a private law firm signal the matter is likely to resolve at the International Centre for Settlement of Investment Disputes.

Attorney General Kiryowa Kiwanuka, who is the chief government legal advisor, in an interview, said: “I heard of it on social media. We have not been formally served but when that happens, we shall study it and advice on how to proceed.”

The money claimed by the businessman is more than what was allocated to key sectors in the recently concluded budget by the House. 

In the Shs48.1 trillion budget for Financial Year 2022/2023, Defence was allocated Shs2.3 trillion, Ministry of Health Shs1.4 trillion, Energy gets Shs1.4 trillion and Uganda National Roads Authority (Unra) Shs2.5 trillion.

Through his lawyers, Mr Ahmed issued a March 21 notice of dispute last month under the Investment Code Act over alleged expropriation of his investment to develop the market.

Ahmed and his companies say they would have made “a profit of 25 percent of $350 million per year over four years (the construction period)” had the redevelopment of the Owino Market not been ‘unduly expropriated’. 

They further claim they would have made a profit of six percent  in compound interest on the accorded loan of $350 million over the period of 15 years (the loan repayment period), which would have amounted to more than $509m in interest only.

Mr Ahmed’s demand is outside the more than Shs1 trillion sought in damages and compensation by St Balikuddebe Market Stalls space and lockup shops owners Association (SSLOA) against KCCA contained in an August 13, 2021 letter.

In a well-documented claim, Ahmed through a Spanish boutique firm, Bottega Di Bella in Alicante, lays out his claim backed by agreements, letters and photos.

The investor, among others, accuses Kampala Capital City Authority and President Museveni of frustrating the project through the “unlawful takeover of the Owino Market”.

“…on June 29, 2021, despite having all the required permits, approvals, and also a favourable ruling of the High Court, H.E. the President of the Republic of Uganda cancelled the redevelopment of the Owino Market thus espousing KCCA’s illegal takeover of the Market.”

They add: “The President effectively cancelled the redevelopment project by decreeing that the ground-breaking ceremony cannot take place. It is noteworthy that while the Ugandan President rejected my clients’ invitation to the ground-breaking ceremony and cancelled the project, he proposed my clients to buy land where to build and operate a market. However, my clients are not interested in any transaction with the Ugandan Public Administration that may entail the payment of any amount of money.”


Allegations

In documents seen by Daily Monitor, Mr Ahmed’s lawyers claim that he was first lured to Uganda in 2019 with a promise of investment interests by the Ministry of Works and Transport through the Gulf East African Investments Ltd.  He, however, says “none of the proposed projects in the engineering, design and construction sector in Uganda were readily available”.

“As none of the advertised projects with the Ugandan Public Administration came to fruition, Dr. Ahmed turned to possible collaborations with Ugandan private companies since at that point he had already set up a company – Al-Ameri Uganda – and opened offices in Uganda, hoping for better luck,” the lawyers say.

On October 31, 2019, Ahmed claims, he was approached by the SSLO) for the redevelopment of the Owino Market.

Subsequently, SSLOA obtained an Environmental Impact Assessment (EIA) certificate from the National Environmental Management Authority (NEMA) on November 21, 2021 and entered into an agreement with Ahmed’s companies.

The agreements concluded include the Project Agreement, the Loan Agreement, and the Loan Repayment Escrow Account Agreement. The project agreement entered on January 24, for example was to finance and construct the new main market as well as a temporary adjacent market where the market’s vendors and traders would be relocated during the construction works. This meant the project would be executed in two phases including the erection of the Relocation Market adjacent to the Owino Market and the construction of the new Main Market.

On January 24, Ahmed’s companies and SSLOA entered into a Loan Agreement in which Ahmed and his companies had to lend $352,794,400  to the SSLOA for the redevelopment of the Owino Market to be repaid over a period of 15 years at a six percent interest rate.

A loan repayment account, jointly controlled by SSLOA and Ahmed, was set up on April 30, 2020 where all payments for all project costs were to be made from and where all proceeds from the sale and rental of the condominium units on the Relocation and Main Markets were to be paid into.

Ahmed’s companies further claim they signed with more than 50 Ugandan companies in order to ensure the supply of different project materials and equipment and with as many local subcontractors.

“Over 2,000 job opportunities became available just at the start of the project,” the lawyers claim.

 On August 21, 2020, after having obtained all relevant approvals and required permits, Ahmed’s companies submitted to SSLOA a letter expressing their readiness to commence the construction works and requesting the handing over of the final approved drawings from the KCCA and of the project site.

Ahmed’s companies subsequently received the “Commencement Letter” on September 21, 2020 authorising them to start mobilisation for the project which, they say, they did with completing the site offices for the project and preparing the mould for the fence foundation.

Reaction

Kampala Lord Mayor Erias Lukwago, who has been vocal against the privatisation of the markets in Kampala and the attendant fraud, said he needed to get more information before commenting on the matter.

KCCA executive director Dorothy Kisaka declined to take our calls. Instead, she asked us to send her a text message which she had not responded to by press time.

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