A parliamentary committee has questioned the return of investment on Mbarara Industrial Park, finding that the park’s management failed to collect rent dues from some tenants and to evict the defaulting entities.
The evaluation is in a report by the committee of commissions, statutory authorities, and state enterprises (Cosase), which is tasked with looking at the audited accounts and performance of regulatory bodies and entities in which the government has a stake. The report was submitted in May 2015, and looked at the accounts of 2011, 2012, and 2013.
The 12-acre facility was acquired in 2009 from the Gatsby Club at Shs2.5 billion. The Cosase report, read to Parliament during the last sitting of 2016, said it is “concerned that with such huge investment, there was no value for money realised to-date.”
The Park is one of 22 planned industrial and business parks managed by Uganda Investment Authority. The parks were established throughout the country “mainly to create jobs and add value to locally available raw materials.” The Mbarara Industrial Park was to be developed into an ultra-modern park to “cater for small scale enterprises.”
When the Mbarara Industrial Park was commissioned in 2007, the-then mayor of Mbarara, Wilson Tumwine, said all small scale entrepreneurs would be pushed from the town to the park. It was estimated at the time that over 100 enterprises would benefit from the space.
A few years later, with 12 active business, the parliament report said that “due to its location, the area was not suitable for an industrial park.”
Cosase’s evaluation found that the park had been divided into 43 workspaces with 33 rented out, leaving only 10 unoccupied. But of those rented out, only 12 were in active production/business.
A more immediate concern was rent payments. The investment authority reportedly entered various rental agreements that stipulate monthly rent payable on a quarterly basis. However, despite these agreements, tenants were not paying the agreed monthly rent.
“Rent ledgers showed that by the close of the financial year, the entity had not collected rent due amounting to UGX 81, 880,000 from the tenants,” the report says.
The committee also found similar problems in other industrial parks. Investors who have taken up space in Namanve, Kampala, Luzira, and Bweyogerere were paying in instalments for the land allocated to them, with the authority registering an outstanding balance for some.
UIA management told the committee that they had collected up to Shs200 million. Cosase recommended that “all money due to the Authority should be collected within six months (and) land should be withdrawn from defaulters.”
Investors are required to pay a premium of $80,000 (Shs288million) per acre of land allocated in Namanve. It is unclear from the parliament report if the Shs200million was payment of recorded arrears or money received for rent in all the industrial business parks. We were unable to obtain clarity from either parliament or the authority.