New Vision (Kampala)

Uganda: Oil - Cost of Living Explodes in Hoima

Bunyoro is teaming with oil workers, migrants and tourists. Hoima town, the heart of the region, is slowly evolving from a small town into one fit to host visitors with cash to spend. This is all in anticipation of the booming oil industry.

This has brought a fair share of changes, mostly in the cost of accommodation, food and rent.

Gone are the days when a decent hotel room cost sh30,000 for a night. If you do not have sh150,000, it is hard to get a room in a decent hotel or lodge in the once little known town which was elevated to a municipal status in the last financial year.

Locals, foreign tourists and oil workers who are employed in oil related projects and migrants said to be looking for opportunities in the oil sector, have greatly contributed to this kind of inflation.

Prices of food in small restaurants have shot up too. A meal that previously cost sh2,000, has slowly inched to sh7,000.

Angela Ndozereho, the manager at Kolping Hotel, which usually hosts visitors going to the Albertine Rift Valley, said most of their guests either head to Murchison Falls National Park, keep around looking for business opportunities or go to the oil fields for adventure.

She adds that most of these visitors book four nights in advance which has made rooms scarce, expensive and out of reach for low income earners.

Ndozereho, said the surge in the prices of rooms and food are more driven by demand, costs of electricity, food and water.

"We increased prices to meet the high costs of commodities. Besides, the demand for rooms is high these days," she said.

She said in August last year, they increased the fee for accommodation to sh75,000 for a double self-contained room from sh50,000.

A single self-contained room has been hiked from sh40,000 to sh65,000.

Gibson Walutila, the manager at Hoima Resort Hotel, which is the newest hotel in town, says they charge sh70,000 and sh150,000 for a single and double self-contained room respectively.

Most of their visitors are foreigners, tourists and businessmen, according to information from the reception register book.

"Most of our visitors come for oil-related activities and business. For instance, last Friday, 10 of the guests I chatted with said they were scouting for land to do investments and eight were service providers related to the oil industry," Walutila says.

"Sixty-five percent of the workshops we host here are on oil."

Walutila, said they have 40 rooms, which are fully booked most of the time.

Many people are opening up businesses to profit from the expected oil boom.

Banks and other micro-finance institutions have opened shop in town, located approximately 225km by road northwest of Kampala.

"The hotels being erected are also targeting oil money. I doubt people will drive to Kampala to spend their earnings. Businessmen are cork sure people will spend it here," Donald Bakire, an economist argued.

Local business suffers

However, the developments have negatively impacted on the local businesspeople who have been pushed to the periphery, fleeing increasing rent prices.

"I operated a grocery shop at the Main Street for close to 10 years, parting with sh2m per year. My landlord told me she was increasing rent to sh8m, which I couldn't afford. I had to shift to Busiisi, which is a bit cheaper but far from the town centre," Kiiza Aheebwa, 40, said.

Aheebwa, said his friends who shifted to the new area in December, used to pay sh80,000, per month, which has also been increased to sh180,000.

Complicated business

Docus Mugisha of Mugisha and Company Real Estate Consult, said getting space for rent in Hoima town is becoming complicated.

"You have to talk to the landlord and promise him a higher amount so that he evicts the one occupying the house," Mugisha argued. She said space is also hard to get because of the demand.

This has pressed a panic button and people owning land in the town centre are erecting storey buildings to tap into the boom.

Old houses are being demolished to create space for construction of new buildings along the Main Street, Old Fort Portal Road and Wright Road.

Due to the demand of space, houses in the middle of the town have been turned into arcades.

Entrepreneurial residents are renting out whatever space they have to take advantage of the housing shortage.

A two-bedroom house fitted with washrooms which was at sh100,000 in May last year now goes for between sh250,000-sh300,000, while cheaper two-room structures go for sh120,000 but are not easy to come across.

Seeking opportunities

Mary Mugasa, the municipal mayor, says many people are increasingly coming to the area looking for opportunities in the oil industry.

Mugasa, said municipal authorities increased taxes on hotels by 50% after classifying them. Grade One hotels pay sh300,000, up from sh200,000 per annum.

Dr. Lawrence Bategeka, the principal research fellow at the Makerere University Economic Policy and Research said because of the discovery of oil, people have expectations of higher income, which is making investors to come with a lot of money. He said most of the local and foreign investors were looking for either land or space for rent to set up businesses hence increase in prices.

"They have preference for the central business area which has better facilities," he added.

"This is just the beginning; the oil refinery is expected to employ over 2,000 people during construction. I anticipate that we are going to have a bigger turn up and prices of everything will go up more than what we are experiencing today," George Bagonza, the district chairman, said.

"But have we prepared our people to embrace these changes to tap from these opportunities?" Bagonza asked.

As the people in this once quiet town go about their business, there is fear that the cost of living in Hoima might become too high for the locals to survive.

Why Hoima is developing so fast

Uganda discovered oil deposits worth 2.5 billion barrels in the Albertine rift basin in 2006.

The Government plans to construct an oil refinery for its petroleum extracts at Kabaale in Buseruka sub-county in Hoima District.

Construction works on the refinery are expected to start late this year.

The proposed refinery will process crude oil for local consumption and export.

Over 29 square kilometres (about 29,000 hectares) worth of land have been earmarked for the refinery.

Demarcation to open boundaries of the proposed land and resettlement action plan to establish property and the people on this land for compensation is ongoing and will end in two months.

"We shall also have an airport, petrochemical industries, and houses for the refinery workers so people should up their capacity in terms of quality and quantity to feed people who will be employed in these sectors," Peter Lokeris, the state minister for minerals, said recently.

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