House to scrutinise K128.7bn hotel deal

Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha has asked Parliament to scrutinise the controversial K128.7 billion purchase of Amaryllis Hotel by the Public Service Pension Trust Fund (PSPTF). Responding to a question from Dedza Kasina member of Parliament (MP) Joshua Malango (Malawi Congress Party-MCP) in the National Assembly on Tuesday, the minister said government backed the directive by the Registrar of Financial Institutions ordering that the transaction be rescinded for breaching prudential guidelines. Mwanamvekha said Parliament, which has an oversight mandate, should look into the deal and other PSPTF property acquisitions suspected to have been overpriced, including the former Sigelege Boutique Hotel in Lilongwe.

“We are equally concerned like any of you and we would want to know the truth,” said the minister, adding that government is ready to support the inquiry with required resources. Mwanamvekha’s remarks follow concerns that the hotel was bought at K128.7 billion after it was earlier valued at K47 billion in 2023. The Reserve Bank of Malawi also cautioned against proceeding with the deal.

Nkhotakota Central MP Sylvester Ayuba James (independent) described the transaction as commercially unsound, arguing that the hotel has been making losses and relies heavily on government business. In his contribution, Lilongwe Phiri la Njuzi MP Peter Dimba (MCP) questioned why a transaction previously halted at K47 billion resurfaced at nearly three times the value. Leader of the House Jappie Mhango said government welcomes parliamentary scrutiny and vowed that any wrongdoing, past or present, will be dealt with.

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First Deputy Speaker Victor Musowa, who presided over the proceedings, said the matter has been referred to Parliament’s Public Accounts Committee (PAC), which will conduct the investigation and report back to the House as soon as possible. Property management and evaluation firm Knight Frank on July 13 2023 valued the hotel at K47 billion. In The Nation of yesterday, property valuation expert Yeremiah Chihana of YMW Property Investment Co, famed for valuating the estate of former president Bingu wa Mutharika at K61 billion in 2012, said the cost escalations for Amaryllis Hotel were inevitable.

He said this was due to the time lag between evaluation and final sale agreement during which devaluation, foreign currency shortages and general price accelerations markedly changed market conditions and the hospitality industry in particular. Said Chihana: “If it were me, presently, I would have valuated that [Amaryllis Hotel] between K156 billion and K167 billion. Look at inflation in 2023, how that changed over time, coupled with devaluation of the kwacha. At some point raw materials for hotels were exempted from VAT [value-added tax], but that changed, obviously that pushes the prices up.” In November 2023, three months after the K47 billion valuation report, RBM devalued the kwacha by 44 percent, a development that sent shock waves in the economy, resulting in skyrocketing prices of goods and services.

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