Uganda: Museveni blocks Libyan ranch deal

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The Monitor | 21 August 2009

Daniel K. Kalinaki

President Museveni has blocked an attempt by a Libyan company to buy a 60-square-mile ranch in Masindi, this newspaper can reveal.

A government plan to buy back the ranch from a local businessman at 100 times what he paid for the lease seven years ago has, however, fallen apart over legal technicalities and financial disagreements.

Ziwa Ranchers Ltd, a company owned by businessman Capt. Joseph Charles Roy and his wife Daisy, paid Shs350 million on June 2002 for a 60-year sub-lease of the 60-square-mile Kiryana ranch in Kijunjubwa, Masindi District.

Under the sub-lease agreement signed with the government-owned Uganda Livestock Industries Ltd,which owns the lease over the land, Ziwa Ranchers had several obligations to fulfill, including increasing the number of cattle on the ranch to 10,000.

After failing to run the ranch and in an effort to raise money to settle pressing financial obligations, Capt. Roy reportedly received an offer by an undisclosed Libyan firm to buy out his 53-year lease remaining on the land at $20 million.

After learning of Capt. Roy's financial woes and his attempt to sell his stake to the Libyan firm, President Museveni on February 23 wrote to Finance Minister Syda Bbumba advising against allowing foreigners to buy large chunks of land in Uganda in order to grow food.

"I am directing you to watch out for foreigners who are buying big chunks of Ugandan land for agro-business," the President wrote. "We do not need foreigners to farm because, as you know, Ugandans do that very well. What the foreigners should do is to process what Ugandans produce like Sameer does with milk."

The President directed the Finance ministry, through the Uganda Investment Authority (UIA), to buy large chunks of land, including Capt. Roy's ranch, and put them in a Land Bank to allow strategic industries on the land without ceding ownership to foreigners.

The attempt to buy back the Ziwa ranch has, however, run aground over several technicalities including the fact that the government would be buying back land that it should be repossessing after Ziwa Ranchers failed to meet the obligations contained in its sub-lease agreement.

An audit conducted by experts from the Ministry of Agriculture, Animal Industries and Fisheries notes that Ziwa Ranchers has run down the ranch and only managed to keep 2,000 head of cattle with most of the infrastructure falling apart. In effect, this should have allowed the government to repossess the ranch.

The deal, in which the UIA was seeking to buy back the ranch at Shs35 billion, has also stalled over the fact that it would be unable to use the land or attract investment onto it.

The first warning signs were raised on March 31, 2009 when UIA's legal department advised against the transaction. In a legal opinion to the board, the legal team argued that Uganda Livestock Industries (ULI) had leased the land to Uganda Property Holdings Ltd (UPH) which had then sub-leased it to Ziwa Ranchers.

Buying the land from Ziwa Ranchers would make UIA a sub-lessee that can use the land but cannot transfer it to another entity. This meant that UIA would be unable to give the land out to an investor and could not carry out ranching because it is not mandated to do so.

"The UIA Board of Directors is advised not to sanction the acquisition of the said land," the legal opinion noted.
Original source: The Monitor
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