Ismaili.NET - Heritage F.I.E.L.D.

Shs 340,000 per year for all 60 acres
• Govt to guarantee Aga Khan’s foreign loan applications
• Aga Khan needs an additional 40 acres in Nakawa
• Govt exempts Aga Khan from paying taxes for project

On top of the 60 acres of prime land in Kampala to house a university teaching hospital, the Aga Khan Foundation will enjoy tax exemptions, government guarantees for foreign loan applications and – possibly – an additional 40 acres, details of a confidential agreement suggest.

The 21-page agreement, which the two parties signed on December 4, 2015 ahead of Prince Karim Aga Khan’s December 17, 2015 visit to launch the construction of the hospital, says the Aga Khan Foundation will pay ground rent of $100 (about Shs 330,000) per year for the 60 acres of land in the Kampala suburb of Nakawa.

“The ground rent of US One Hundred Dollars (US$100) per year shall be payable in full for the initial five (5) years upon the granting of the lease. Upon extension to the full term of ninety-nine (99) years, the ground rent herein reserved shall likewise be payable in advance for the entire term of the lease,” says the agreement, a copy of which The Observer has obtained.

This means that the Aga Khan Foundation will pay a total of $10,400 (about Shs 34.3 million) to use the land for the first 104 years of its lease ($500 for the first five years and $9,900 for the next 99 years).

“The government undertakes to waive payment of any premium for the lease or in any respect for the land,” says the agreement, which adds that the Aga Khan will pay administrative charges for the preparation of the lease and a certificate of title, nominal stamp duty, title charge, registration fee and bank charges.

His Highness the Aga Khan and President Yoweri Museveni lay a brick at the Nakawa site to symbolise the foundation stone-laying for the Aga Khan University hospital

The minister for Lands, Housing and Urban Development, Daudi Migereko, signed on behalf of Uganda while the chairman of the National Committee Uganda, Anil Samsi, signed on behalf of the Aga Khan Foundation. Witnesses included the acting solicitor general, Christopher Gashirabake, for Uganda and the Aga Khan Development Network’s diplomatic representative in Uganda, Mahmood Ahmed.

In a telephone interview with The Observer yesterday, Migereko confirmed the contents of the agreement, explaining further that ordinary Ugandans stand to benefit immensely from the deal.

“They [the Aga Khan Foundation] will be offering subsidised services, not commercial services. But the important thing is that we shall be having the badly-needed specialised treatment that we have been looking for in India, South Africa, Nairobi [Kenya] and so on,” he said.

The ministry of Health estimates that Uganda spends at least Shs 380 billion annually to send top government officials abroad for medical treatment, with the Aga Khan hospital in Nairobi recently becoming a sort of referral facility for many cases from Kampala.

Speaking at the land grant ceremony in Kampala, the chancellor of Aga Khan University, Prince Karim Aga Khan, said they are working on the concept of an integrated regional health system that will be supported by e-medicine and that e-medicine will be supported by international relationships.

“Essentially we are trying to build a network of tertiary care hospitals, teaching hospitals throughout eastern Africa. We are trying to add to that network of teaching hospitals, medical units which are partly educational system but which will become referral institutions to our major network institutions and our hope is that over the years we will have a system covering East Africa where an individual needing care will be able to enter the system at any point and receive the appropriate health care, whether it be in Uganda or in Kenya or in Tanzania or even further afield,” he said.

According to the Aga Khan, who is the head of the Ismailia Community, his health network will in the decades ahead concentrate on dealing with non-communicable diseases which confront modern society, such as diabetes, hypertension, cardiovascular disease, as well as mental and neurological illness and cancer.

Construction of the hospital is expected to start “not later than July 2017,” according to the agreement. The Aga Khan Foundation will use the prior period for “planning and design” of the hospital, expected to cost $100 million (about Shs 330 billion) and be operational in 2020.

The entire project will be undertaken in phases, says the agreement, with related facilities to be constructed later earmarked “for the provision of education, research and ancillary functions and operations” as may be determined by the Aga Khan Foundation.

Prince Karim said he believes that building a university research hospital of global quality will help arrest the massive brain drain affecting Uganda’s medical sector.

“Uganda has doctors and nurses who are successful in their professions but who are not in Uganda,” he said. “It is my hope that by building the Aga Khan University hospital here in Uganda, the wonderful doctors and nurses who are Ugandans, who are working outside Uganda, will come back and work here in an institution which not only will welcome them but give them the best professional conditions in which they can work.”

SPECIAL WAIVERS

According to the agreement, the government has pledged to exempt some agencies within the Aga Khan Development Network (AKDN) which are involved in the construction of the Nakawa project from paying taxes.

“The government acknowledges and confirms that the not-for-profit social development agencies of the Aga Khan Development Network are exempt from the payment of all taxes direct and indirect, fees, duties and imposts in accordance with the Accords and Protocols of the Cooperation for Development in Clause 2 hereof and the Statutory Instruments that have been issued by the government of Uganda published in the Official Gazette,” notes the agreement.

Additionally, in accordance with the standing rules on land allocation within the city, which require the government to offer an initial five years that can be extended upon fulfilment of initial development requirements, the five-year lease to the Aga Khan is supposed to automatically turn into a perpetually- renewable 99-year lease.

However, unlike other land deals, the government has given a special waiver to the Aga Khan Foundation if it fails within the first five year to meet the terms of the “development covenant” that the two parties agreed upon.

“In the event that the Development Covenant has not been fulfilled by the expiry of the initial five (5) year term, it shall be extended for such further period as may reasonably be necessary (having regard to the full context and international best practice),” says the agreement.

Ironically, the government used the five-year rule during negotiations with OpecPrime Properties, which it had initially given 160 acres of the Naguru-Nakawa land, to reclaim the 60 acres and give them to the Aga Khan Foundation.

On October 15, 2007, the government and OpecPrime Properties signed a public-private partnership (PPP), which authorised the company to construct 1,700 housing units on the Naguru-Nakawa land. However, eight years later, the project is yet to take shape despite the 2013 formal construction launch graced by President Museveni.

Speaking at the land grant ceremony for the Aga Khan hospital project’s initiation on December 17, the director of OpecPrime Properties, Prince Hassan Kimbugwe, said they had surrendered part of the land so the Aga Khan Foundation could construct one of the items on their original master plan.

“For us to develop the area, we had a master plan. We were thinking of either building a mega shopping mall, government offices or university. So, when the Aga Khan group approached us, we had no objection,” he said.

LOAN GUARANTEES

According to the agreement, all funding for the project will be sourced by the Aga Khan Foundation. However, the government has made a commitment to guarantee the Aga Khan Foundation’s application for funds from foreign sources, including loans.

“The Aga Khan Foundation confirms that it will be using its privately-arranged and/or procured finances and, therefore, the Aga Khan Foundation shall assume all the financial, technical and operational obligations and risks in the design, financing, building and operation of the project.”

However, the government, through the Minister of Finance, Planning and Economic Development, agrees that it will provide letters in support of the project and other education and research initiatives in Kampala to international funding agencies and institutions to facilitate grants, soft loans and concessional funding for the project,” says the agreement.

On the project land, a clause in the agreement says “a total of one hundred acres of land is estimated to be required” for the construction of the university teaching hospital and the other associated facilities. However, with the government having provided only 60 acres, questions abound about whether the Aga Khan will want another 40 acres for his project. Yesterday, Migereko told The Observer it will not be necessary.

“We could only raise 60 acres [so] they will go upstairs. There must be optimal utilisation of space and buildings can go up. We can go in for high density, high rise buildings even for a hospital so 60 acres for the time being can be adequate,” said the outgoing Butembe County MP.

FAST-TRACKED DEAL

Correspondences between Migereko and the Uganda Land Commission also indicate that the government fast-tracked the deal, which President Museveni told guests at the launch had stalled for at least two years.

On December 7, 2015, Migereko wrote to the Chairman of the Uganda Land Commission, Baguma Isoke, asking him to urgently convene his commissioners and formally change ownership of the 60 acres of prime land in Kampala.

Migereko’s two-page letter said the government had re-possessed about a third of the 160 acres of land that it had initially offered to Opec Prime Properties for development of an estate, and would now offer it to the Aga Khan Foundation for construction of a university teaching hospital.

Writing with just 10 days to the handover ceremony that Prince Karim Aga Khan was flying in for, Migereko urged Isoke to summon his nine-member commission to fast-track the process of granting leasehold to the new owners.

“This is therefore to draw your attention to the above developments and request that you urgently convene the Commission and consider this application without further delay,” Migereko wrote to Baguma.

“I highly trust that you understand and appreciate the importance and urgency this case presents,” he added.

Deal: The Aga Khan welcomes President Museveni to the Nakawa site of the Aga Khan University Hospital Kampala

Indeed, by the time the Aga Khan arrived, President Museveni was waiting with the lease and certificate of title in hand. During the land grant ceremony at Nakawa, the Aga Khan lavished praise on President Museveni as “a man of action — he likes results!”

“I want to thank the president for making this site available. Because when all is said and done, the institutions also depend on their location. And this location is one of the best locations we could have asked for in this wonderful city of Kampala,” said Prince Karim.

FATE OF TENANTS

In his letter to ULC, Migereko said the government reclaimed the land after engaging in negotiations with OpecPrime Properties to surrender the land on which Uganda Land Commission had granted them leasehold of 99 years.

“These negotiations were concluded and the owners’ copy was surrendered together with a duly executed Deed of Surrender in favour of Government,” Migereko wrote. “The Deed of Surrender was registered and the Certificate of Title formerly comprised in Leasehold Register Volume 4248 Folio 14 in the names of OpecPrime Properties was cancelled and no longer exists.”

Asked about the terms of the negotiations with OpecPrime Properties, Migereko declined to comment, only saying, “They were asked to indicate what they had spent and we are waiting for them to indicate.”

He then referred The Observer to OpecPrime Properties, who were not available for comment by the time we went to press. Contents of the Uganda-Aga Khan deal also indicate that the government could have thrown the former Nakawa housing estate tenants under the bus, putting their opportunities of getting flats under the Opec deal in doubt.

In the agreement, the government says there is no dispute over the land but, in the same vein, promises to insulate the Aga Khan Foundation from any disputes over the land, should they eventually arise.

“The government confirms that the site is free from any aliens or encumbrances and that there are no rates, taxes, assessments, duties and charges unpaid or outstanding in respect of the previous owners/lessees of the land to date,” says the agreement.

“Should there be any outstanding matters, the Government shall promptly settle such matters and dues and shall indemnify and hold harmless the Aga Khan Foundation from any losses or damages incurred as a result of any claim and/or litigation relating to the land,” it adds.

However, Prince Kimbugwe told those in attendance at the land grant ceremony that they intend to meet their end of the bargain with the tenants. He said, “I would like to assure the former 2,000 tenants who we promised housing units that they are to get apartments at the Naguru Housing Estate.”

hobenon@observer.ug

This article is a product of The Watchdog, a centre for investigative journalism at The Observer