Kampala International University campus in Kenya up for sale over Shs55.7b debt
Housing Finance Group head office in Nairobi. PHOTO/NMG/FILE
What you need to know:
- The loan had a 9.5 percent compounded interest rate from January 2018—which means that KIU is required to repay an excess of $24million.
An auctioneer has put up for sale an educational complex in Kajiado County belonging to Kampala International University to recover a debt of more than Shs55.7 billion ($15 million) owed to mortgage lender Housing Finance.
Valley Auctioneers on Monday invited bids for the purchase of the complex that sits on a 61.3-acre parcel of land in Kisaju, approximately 1.5 kilometres off the Nairobi-Namanga Highway.
The incomplete educational complex comprises a four-storey administration block, five five-storey tuition blocks comprising five interconnected blocks, a four-storey library, two kitchen and dining blocks, a five-storey housing block and a hostel block.
The complex also has a five-storey guest house, a powerhouse, stores block, a security guard block, and a four-bedroom bungalow.
“All interested purchasers are requested to view and verify the details as the financiers/charges or the auctioneers do not warrant these,” Valley Auctioneers said in a newspaper notice, adding that the sale would be conducted on September 19.
Kampala International University lost a bid to block the sale of the Kisaju property in April after the Supreme Court dismissed its second appeal in the loan dispute.
The university borrowed the loan in 2014 to develop its Kitengela campus but defaulted. Buoyed by the success of its existing campuses, the university sought to expand into the Kenyan market and acquired the land to construct the Kitengela Campus at an estimated cost of $15 million.
The loan had a 9.5 percent compounded interest rate from January 2018—which means that the university is required to repay an excess of $24million.
Kampala International University first approached Housing Finance for the loan in 2010 and the deal was inked in 2014. The land was charged to the mortgage lender as security for the loan.
According to the university, the bank disbursed a loan of $10 million in January 2014, but there was a delay in disbursing the balance of $5 million.
The university then sued for damages, among other demands and Housing Finance filed a counterclaim, which was upheld by the arbitrator, who ruled in favour of the lender in 2019.
A subsequent appeal to the High Court was dismissed by Justice Margaret Muigai, forcing the university to head to the Court of Appeal, but suffered the same fate and, unsatisfied, the university escalated the matter to the Supreme Court.
In April, a bench of five judges of the Supreme Court dismissed the second appeal, saying there was no constitutional interpretation in the matter to allow the apex court to invoke its jurisdiction and determine the case.
"This court has consistently held that the mere claim by a party to the effect that its rights were violated by a superior court for whatever reason, does not bring the intended appeal within the purview of Article 163 (4) (a) of the Constitution," the Supreme Court said.
The judges added that the appeal by Kampala International University did not fall within any of the exceptions that would justify the court to assume jurisdiction and deal with the matter.
"In fact, we are satisfied that, by declining to grant leave to appeal in the circumstances of this case, the Court of Appeal was correctly guided by our decisions," Deputy Chief Justice Philomena Mwilu and Justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung'u, and Isaac Lenaola said.
*Written by Sam Kiplagat
