How Ndere fell deep into Shs10bn debt

A few days ago, Quickway Auctioneers and Court Bailiffs listed for public auction, three properties including Ndere Cultural Centre, a well-known institution for cultural preservation and education, due to an unpaid loan.

The public notice indicated that Ndere Cultural Centre, spanning 3.645 hectares on Kyadondo Block 216, Plot 2872 Kigoowa was scheduled for auction this month but details about the loan were not indicated.

The Nile Post has learnt that in 2019, Ndere Troupe Limited sought to diversify and expand its business horizons to among others include Obuntu Cuddle Hotel on top of Nakabugo Hill near Bulenga/Bbira, Obuntu Tourist Lodge on the shores of Lake Mutanda in Kisoro and Obuntu Home with a museum at Kabanyoro in Ntugamo district.

The loan details

According to our sources, the Shs 7 billion loan was approved by Uganda Development Bank Limited in 2019 to among others finance a Shs 1.9 billion existing loan with Bank of Africa within 55 months and Shs 720 billion for completion and operationalization of Obuntu Lodge in Kisoro with a 10-year repayment period and six months of grace.

The loan also included Shs 4.2 billion to complete and operationalize Obuntu Cuddle Hotel in Nakabugo, Bulenga Wakiso by financing the first phase of the project for 20 rooms with the second phase anticipated in 2025 for an additional 20 rooms.

The facility was secured by a mortgage on the land and buildings registered under Ndere Foundation, Ndere Troupe Limited, and Stephen Rwangyezi.

Whereas the loans were taken in 2019, Ndere Troupe had by last month when Ndere Centre was listed for auction not made any loan repayments to the bank, including the refinanced facility whose cashflows were based on the existing business at Ndere Cultural Centre in Ntinda.

Nile Post has also learnt that at the time of refinancing the Bank of Africa loan to a tune of Shs 1.9 billion by UDB, it was being serviced and it was expected this would continue being serviced from the operating business but this was not the case.

With the onset of the COVID-19 pandemic and its effects that hit the world, delaying completion, Stephen Rwangyezi, the proprietor of Ndere Troupe in March 2021 requested Uganda Development Bank to reschedule the loan repayment period which was granted.

A six-month additional grace period was granted by UDB to cater for the COVID-19 pandemic challenges and the resultant disruptions in the tourism sector at the time.

The problem

Nile Post has also separately learnt that in Kisoro where Ndere Troupe was to construct Obuntu Lodge, the supplier had fitted substandard materials which later had to be removed and replaced with better ones.

This led to delays and increased costs but Ndere Troupe never reported the same or share reports with UDB about the same.

In Bulenga, Ndere Troupe changed the scope of the project from the approved 20 rooms to 64 rooms without UDB’s knowledge. This therefore meant the funds extended to Ndere Troupe could not complete the project and therefore he needed more.

Additional funding

In October 2022, Ndere Troupe requested for additional funds to enable them to complete the redesigned project to a tune of Shs 6.6 billion but was rejected on account of breach of agreement by changing the scope of work without notifying UDB and also because of failure to service the refinanced loan.

With this state of affairs, several meetings were convened between 2022 and 2023 between Rwangyezi and UDB in relation to the project and the payments for the loan recovery.

During these meetings, Ndere Troupe kept asking for waivers of interest and penalty, but also additional funding from UDB despite the record of poor performance of the loans. Consequently, the bank refused to heed the request.

Meanwhile, in March last year, after a series of demands for Ndere to regularize their account, the facility requested an intervention that would accord them additional time before the bank embarked on the recovery process.

Ndere indicated in the request that they would commence repayments after cash flows from Ndere Centre had improved with an increase in the number of shows to three per week at the facility while Obuntu Lodge in Kisoro had commenced operations using eight rooms and thus could generate cashflows.

This website has learnt that despite making the above pledge, Ndere didn’t fulfill the commitment to the repayments, and neither did they regularize their accounts.

With this state of affairs, in July last year, another meeting was convened to address the repayment and failure to meet previous commitments that had been made.

During the meeting, UDB offered Ndere Troupe three options, including settlement of the entire arrears amount which was at the time amounting to Shs 2.4 billion. This was to be settled within the 45-day notice period by the statutory default notice.

Ndere Troupe was in alternative asked to settle the entire outstanding loan of Shs 9.3 billion within 24 months or refinance the debt with another financial institution.

With this state of affairs, Rwangyezi said he would settle the loan within two years, and to this, UDB insisted they would not consider any other request for additional financing or waiver of interest on the loan following the record of non-payment.

Auctioning

In May, this year, having realized that Ndere Troupe had failed to honor their commitments to repay as had been proposed, UDB issued a 21-day sale notice on May 13, 2024.

Consequently, UDB outsourced Quickway Auctioneers that advertised the mortgaged property but also wrote to Ndere Troupe and Steven Rwangyezi over the same.

In a subsequent meeting, on August, 27, Rwangyezi was asked to either source for a buyer since he has the first right of redemption or refinance the loan through debt/equity within the residual notice period.

Last week, Rwangyezi appealed to President Museveni to save the iconic institution from going under due to an unpaid loan.