I recently discussed the government's proposal to build an international convention center in Munyonyo in conjunction with Sudhir Ruparelia with a group of Ugandan friends. Uganda will host the Non-Aligned Movement (NAM) summit in January 2024. So far, 88 leaders of state and government have confirmed their attendance.
The Serena Hotel in Kampala already acts as the country's international conference centre. However, the government considered that a big and modern one was required for NAM aims. The new conference facility will include a main hall seating 3,800 people and 12 breakout session rooms. The project will cost $47 million to build. Allow me to declare an interest: Sudhir is a friend of mine.
The government launched a 50/50 joint venture with Sudhir under the Uganda Development Corporation (UDC). Each party contributed $10 million in stock. The consortium received a $27 million loan from the government.
My Ugandan coworkers were furious that the government was "giving Sudhir money." They said Sudhir should have borrowed money to build it. They claim that the government will never benefit from this investment.
To justify this, they allege that the government invested $8 million in Speke Commonwealth Resort Munyonyo with Sudhir in 2007 for a 25% stake but has never earned any revenues. The group, they argued, would never repay the $27 million loan.
I dislike Uganda's government because it often fails to make cost-effective decisions. However, I feel this was the finest investment they could have made. Why? The government envisioned a large international convention center. It's understandable that they wanted to "show off" for the sake of national pride. The convention center, on the other hand, might serve as a basis for growing conference tourism in Uganda.
The Kigali Convention Center and the nearby Radisson Blue Hotel were built by Rwanda's government, which is arguably the most committed to development on our continent. Kigali promotes conference tourism aggressively and well.
Private investors are not interested in a huge international conference center like the one Uganda is building in Munyonyo. This is due to the fact that the conference tourism sector is not substantial enough to support such an investment. That is why no private investor has ever built one in Kampala, and Sudhir would never borrow money to build one.
Serena, Uganda, has an international convention facility as well. The former Nile Hotel was leased by the Aga Khan, who restored it and gained handsomely from it. He has never, however, refurbished the conference center part. The bathrooms are unclean, the furniture is outdated, the doors are creaking, and the glass windows are moldy.
However, if a large international convention center is advertised internationally, it may become profitable. Individual investors, on the other hand, cannot afford such a charge. Because of this market failure, the government must step in.
A major convention center may not be financially feasible for private investors, but the government may need it to conduct huge conferences of political importance or notoriety.
The government also promotes Uganda as a tourist destination. As Rwanda has done, it may aggressively promote Meetings, incentives, conferences, and exhibitions (MICE) tourism as a strategic goal. The benefits of increased conference travel will far surpass the costs on the convention center's profit and loss statement.