19 April 2017

Tanzania: Agony of Investor As Bank Auctions Sh5 Billion Hotel

Photo: The Citizen
Bagamoyo Special Economic Zone: The Exim Bank is auctioning Mr Slim’s luxury hotel and conference facility in Bagamoyo over his failure to repay a debt amounting to Sh900 million. The bank is asking for a reserve price of Sh2.5bn for the hotel, which Mr Slim contends is valued at about Sh5 billion. The hotel will be sold on Saturday.

Dar es Salaam — For Mr Slim Slim, the next few days will be life-changing as he stands to lose an investment he set up using money he saved for over 25 years working as an expatriate in Norway.

The Exim Bank is auctioning Mr Slim's luxury hotel and conference facility in Bagamoyo over his failure to repay a debt amounting to Sh900 million. The bank is asking for a reserve price of Sh2.5bn for the hotel, which Mr Slim contends is valued at about Sh5 billion. The hotel will be sold on Saturday.

The Bagamoyo resident's prayer is that the hotel is sold for its true value so that he may recover some of his lifetime investment he made to establish the property.

"I also hope that the Bank of Tanzania can intervene to save investors like me from the torment that we are facing due to failed promises by the government to put in place a conducive climate to do business as promised," he said.

Called Green Park Village, Mr Slim's property was the dream that he carried back home after deciding to leave Norway. "I sold everything I owned in Norway and decided to come back to my country after a plea by the government for Tanzanians in the diaspora to take part in our country's development," he told The Citizen in an interview yesterday in Dar es Salaam.

Mr Slim is, however, not alone as several such investments in the hospitality and real estate are currently going through a rough patch in the wake of a financial crunch in the market.

Alongside the Green Park Village, Exim Bank is today also expected to auction Peninsula Apartments in Msasani for $5.2 million or Sh11.4 billion. The Citizen couldn't immediately establish the amount that the apartment owners owe the bank. Financial institutions in the country are said to be sagging under huge non-performing loans from individuals and companies. Most banks are also not lending to bail out investors such as Mr Slim over market unpredictability even though BoT has recently taken policy measures to unlock an estimated Sh500 billion for the banks to extend credit facility to their clients.

A spokesperson at Exim Bank confirmed the lender has indeed advertised for the auctioning of the two properties after owners failed to clear their debts as agreed.

Yesterday Mr Slim, who was born in Bagamoyo 50 years ago, said he owes the bank Sh920 million for the facility located in Old Bagamoyo Town. He said he borrowed $400,000 at an interest rate of 10 per cent from the bank three years ago and failed to pay off the debt when it came due last year.

"The chunk of money that I owe the bank is not that far huge... it's only a mere 20 per cent of the value of the property." noted Mr Slim.

As of 2015, according to the bank's valuation records, the value of Mr Slim's property stood at Sh4.6 billion.

Many investors, according to Mr Slim, ran into trouble due to the unfriendly environment for investment in the country.

They include, lack of incentives, delay in completion of construction of Bagamoyo Port and Special Economic Zone in Bagamoyo, He said his investment was tied to the establishment of the port.

"I am now hurting for the sacrifice I made seven years back selling all my properties in Norway on an understanding that the investment environment in my country was attractive," noted Mr Slim.

The man who worked and lived in Norway for 25 years lamented that the diaspora were told by the government that the Bagamoyo Port would be ready in five years but has since evaporated.

"I was optimistic that with the completion of the port I stood the chance to offer services to expatriates, importers and other users of the port."

His investment of 20 luxury hotel rooms, seven conference facilities and two recreational centres have now turned into a source of nightmare for him.

"It is unimaginable that the property, of which I own 80 per cent, is to be auctioned just because of a mere 20 per cent owed to the bank," he lamented, adding that he blames the government, not the bank, for his bad situation.

He said if the government was supportive to investors, it would request the Exim Bank to give him and others a grace period of at least a year to clear their debts. He also pointed an accusing finger at banks in Tanzania for their failure to refinance traders like him, saying he has requested for refinancing of the project from almost all banks in the country to no avail.

Mr Slim is also worried about a syndicate that, he claims, colludes to sell investors' properties at throwaway prices. "I earnestly feel the central bank should have intervened in cases such as mine so that I don't lose all the family's lifetime savings," he says, adding:

"This will be the fifth time my property comes up for auctioning but no credible buyers turned up during the auction... this is because investors don't have courage to invest anymore," he said.

He cautioned that if the government doesn't improve the investment climate, it will scare away more other potential investors.

He said last year alone, there were five hotels he knew that closed due to poor business performance attributed to unfriendly environment for investment. He said there are 150 more hotels that have indicated they wanted to sell out of the local market.

"I am discouraged too; I neither have any other businesses nor business idea in mind to substitute my current business." notes Mr Slim, a former employee of a construction company in Norway.

Reached for comment, Peninsula Apartments administration declined to comment on the sale of the beach front property.

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