The Aga Khan’s bid to build lodges for tourists in Uganda’s national parks has left government unsure of how to deal with a 30-year monopoly agreement it signed with the Madhvani Group while at the same time allow in more investors into this lucrative business.
Madhvani Group for his intervention after Uganda Wildlife Authority announced that they had withdrawn from the Exclusion Zone Agreement affective August 1, 2010. UWA is the statutory body that manages game parks in the country.
While opening chobe lodge in Murchison falls, president Museveni noted that if change arises the contract can be negotiated upon.
“This is illegal and cannot be done in this manner. As investors, we are extremely disappointed to have the goal posts suddenly being changed after we have invested over Shs 60bn in these two national parks,” Mayur Madhvani, one of the group’s directors told the President.
He added: “This, Your Excellence, is very concerning to us and we seek your intervention and guidance on this serious and unjust issue.”
However, the President’s brief response was interpreted by industry players as a fight lost by Madhvani.
“They (Madhvani) should prepare for competition. Government cannot look on as they act as a stumbling block to the industry. This monopoly thing is not logical, everybody knows it,” a tour operator who preferred anonymity said.
In 1995, the Madhvani signed an agreement with the government in an Exclusion Zone Agreement for exclusive rights to provide five star accommodation in Queen Elizabeth National Park and Murchison Falls National Park.
Under the agreement, no other investor would set up a lodge/hotel within a radius of 25 miles from Mweya, Paraa and Chobe safari lodges, which the group acquired from government during the privatization exercise.
“One of the reasons we have accommodation problems in the park is the issue of the exclusion zone,” a highly placed UWA officer who preferred anonymity said.
The officer said this agreement has scared away many potential investors in the parks leaving the Madhvani Group the only provider of accommodation in the parks.
This has impacted negatively on the industry as the accommodation rates remain high with a negative impact on the number of tourists to the parks. The lowest price for a single room at Chobe Safari Lodge, for example, is $155 (about Shs 352,000) per night.
“This exclusion zone thing has really affected the growth of tourism in Uganda. In fact, it has strangled the industry. These lodges are unaffordable by domestic tourists,” the UWA officer said.
In Queen Elizabeth National Park, for example, most tourists stay in Kasese town as a way of cutting down on accommodation costs. But this is usually against their wish because most tourists prefer to stay in the park where they can have a feel of the wilderness.
Last year, when tour operators under their umbrella body, Association of Uganda Tour Operators (AUTO), hosted Maj Gen Kahinda Otafiire as new Minister of Trade, Tourism and Industry, their priority request to government was to revise the issue of monopolies in national parks.
“Most of the tourists who come here want to stay in the park. Government should find a way of getting out of this contract so that other people can also build in the parks and bring down the prices of a room and make the packages cheaper for tourists,” Henry Okecho, then AUTO President said.
“Sometimes you get tourists but the place is full and you have to cancel the trip or find somewhere else,” he added.
During peak seasons, Murchison Falls National Park experiences room shortage of up to 40 percent according to Amos Wekesa, chairman of the Uganda Tourism Association.
Opening the space for other investors is seen as a timely move that will bring down the prices of accommodation in national parks.
The Aga Khan Foundation, which has already secured space for a lodge in Kidepo Valley National Park, is set to be given space in both Queen Elizabeth and Murchison Falls national parks, the most sought after parks in Uganda.
“Aga Khan’s marketing arm is bigger than what government can invest in promoting tourism,” Wekesa said.
He added: “They have a chain of repeat clients who have been to Kenya and Tanzania that they can channel to Uganda.” The Aga Khan Foundation owns Serena hotels in Kenya, Tanzania and Uganda.