The minister of Gender, Labour, and Social Development, Betty Amongi has appointed Patrick M. Ayota as the new managing director of National Social Security Fund (NSSF).

His five-year term took effect yesterday, August 18. Ayota has been deputy managing director since December 2017 and chief finance officer from 2011.

The appointment follows the NSSF board of director's recommendation to the minister. Ayota has been the fund's acting managing director for the last eight months which have been dogged by turbulence including probes by parliament's committee on commissions, statutory authorities and state enterprises (Cosase), the Inspectorate of Government (IG) and a presidential team.

The fund's board says Ayota ensured its stability during the challenging period, according to a letter signed by the chairman, Dr Peter Kimbowa. He comes at a time when the fund's primary constituency; the workers union movement is divided over the recent happenings that saw the National Organisation of Trade Unions (NOTU) split into two leadership factions.

One faction sympathetic to the minister attempted to sack Wilson Owere as chairman general before the court declared the move illegal. He had accused the minister of overstepping her powers to influence the budget of the fund, including the allocation of Shs 6 billion to herself, accusations she denied.

Former NSSF managing director, Richard Byarugaba, last week petitioned the civil division of the High court challenging a decision not to renew his contract. Byarugaba is also seeking an order directing minister Amongi to fulfil her statutory duties and "complete his reappointment as the MD of NSSF as recommended by the board and required by the law." 

He said that rejecting the board's recommendation to reappoint him was against the procedure because it was done without giving him a right to a fair hearing, thereby violating his legitimate expectations.

Byarugaba was twice MD of the fund, from 2010 to 2013 and from 2017 to 2022. But late last year, Amongi told Byarugaba that he could not be reappointed nor his term temporarily extended till a substantive appointment was done because he was already past the upper age limit of 60 years. She named Ayota into an acting capacity. 

"The board is confident that he is the right person to steer the fund forward at such a critical time following changes in legislation that oblige the fund to play a leading role in expanding social security coverage to all Ugandans," said Kimbowa in the letter.

He ends with the assurance that the fund is stable and on course to surpass its 2015-2025 strategic objectives. - URN/The Observer

 The exponential growth of Airbnb in major towns around the country is shaking up the Kenyan hospitality industry as it devours a share of traditional hotels’ revenues. 

The proliferation of the service has also seen a significant drop in room prices and occupancy rates, a spot check by Weekend in Business shows.

Over the past 10 years, Airbnb has grown into the world’s largest online marketplace for accommodation and now qualifies as a disruptive innovation.

And just as in the rest of the world, the hospitality industry in Kenya is slowly experiencing a shift as hotels and lodgings lose out to the rising popularity of Airbnb services.

A spot check shows that more landlords who own holiday homes within Nairobi, Kisumu, Nakuru, Naivasha, Mombasa, Nyeri, and Nanyuki towns, among others, have turned to the Airbnb platform and are reaping huge returns.

Since its launch in 2008, Airbnb has become popular among travellers seeking affordable accommodation, convenient location and household amenities. 

In Nyeri County, for instance, iconic hotels including the Outspan, The White Rhino, Treetops and the Greenhill Hotel, which offer traditional accommodation, are on the verge of closing down as Airbnbs eat into their market share.

According to the Nyeri-based owner of Hampton’s Apartment, Linet Murage, holiday homes have become popular, threatening the existence of traditional hotels.

She says Airbnbs have an edge over these hotels in that prices are negotiable, allowing clients to stay for extended periods. “I decided to venture into the Airbnb business after noting that holiday homes were in high demand in Nyeri,” says Ms Murage.

She ventured into the business in 2021 by converting her house into a holiday home to compete with surrounding hotels.

“It was not an easy road. In 2019, I was a casual labourer but started saving from the little I earned. I invested the savings in furnishing and decorating my house. After the pandemic, I discovered that those looking for accommodation had started shifting to other towns, where there were holiday homes,” says Ms Murage.

She later rented the house next door after her neighbour moved out and converted it into an Airbnb too. Studies show the Airbnb business model has flourished for many reasons.

Customers like having access to an enormous supply of properties and rooms at a wide variety of prices, often more competitive than hotels, and Airbnb collects commissions on every booking.

In addition, players say, the company does not follow conventional rules. “Airbnb does not ensure the security of guests, it’s not taxed in some jurisdictions, and it has the flexibility to add new supply because of a lack of regulation,” says one study into the business model.

This has benefitted entrepreneurs like Ms Murage, who is capitalising on the boom.

The beauty of the Airbnb concept is that one does not have to legally own the building, with many operators hiring out rented space, which they furnish to meet the required standards.

And with guests increasingly opting to stay in Airbnb accommodations, competition between traditional hotels and Airbnb is boiling over.

“The industry has become very competitive. To offer the best customer service, I offer breakfast, laundry, toiletries and a chef on request. If a client gets the best service, they will refer you to other clients. I only charge Sh3,000 per night and allow only two visitors in one room,” she says.

Cause disruption

Ms Murage sees holiday homes as the future of accommodation and dreams of expanding her business.

And she has every reason to be optimistic. A recent study showed that the rise in popularity of Airbnb was always going to cause disruption to the established Kenyan hotel industry, much in the same way that Uber upset traditional cab companies.

This disruption can be understood as part of a wider move towards disruptive technologies and online community marketplaces, experts say.

The desire for homeowners to earn an income by sharing their homes has unlocked a hitherto underutilised asset through the Airbnb platform.

“Many hotels offer very poor services, while an Airbnb offers clients a totally different experience. Home sharing platforms are likely to gain more ground over time as travellers become increasingly aware of their benefits,” says Ms Murage.

She added that landlords who own holiday homes are ready to comply with the Kenya Revenue Authority (KRA) and ensure their businesses are registered.

“People are embracing Airbnb. It is a good business to venture into, let all those willing to join get their business registered to avoid giving room to conmen,” she said. 

James Mwangi, a lodging owner in Nyeri, said since the launch of Airbnb in the town, his business has taken a considerable hit. “We used to get many clients, but they now prefer to book Airbnbs located outside the town for a quiet night’s rest, leaving our rooms empty,” says Mr Mwangi.

He now plans to convert his rooms into Airbnbs to stay in business. One of the more obvious ways hotels have been responding to the competitive threat of Airbnb has been via their pricing strategies.

While it’s not ideal, it’s still preferable for a hotel to have some minimal level of occupancy rates at discounted prices compared to managing an empty hotel.

Hotels are also listing themselves on the Airbnb platforms to tap short-term clients. 

They are also leveraging amenities like swimming pools, steam rooms, gyms, ample parking and adequate security, which Airbnbs lack, to counter the new wave of competition from the platform. By Amos Kiarie and Brian Ngugi, The Standard

Parliament has suggested a raft of measures in the management of the silkworm project after which it emerged that over Shs 20 billion of Shs 35 billion invested in the initiative was wasted.

The silkworm project is one of the science initiatives that has so far received Shs 31 billion from the Innovation Fund established by President Museveni in 2016 and commenced operations in the financial year 2017/2018. 

Dr Clet Wandui Masiga, who heads the Tropical Institute for Development Innovation (TRIDI), was one of the researchers who applied for the innovation fund to implement a project titled, "Evaluating the Utility of Sericulture and Apiculture Technologies and Innovations, as tools for household-wealth creation and employment generation in Uganda." 

The key targets of the silkworm project were to acquire 50,000 acres of land under mulberry, construct and equip eight research and technology transfer centers, construct 25 million cubic meters of valley water tanks, construct 50,000 silkworm rearing houses, install six complete lines of post-cocoon processing equipment in six major regions of Uganda, and install 50 complete sets of 40-end silk reeling factories in 50 districts of Uganda. 

The investment was projected to be about Shs 756 billion over a period of five financial years.

Findings 

However, the parliament’s committee on science, technology, and innovation, which investigated the operations of the silk project, observed poor sequencing of the sericulture processes, resulting in the wastage of resources amounting to Shs 20.7 billion.

"The said amount (Shs 20.7 billion) was sunk into the establishment and management of mulberry gardens whose leaves matured and went to waste because the rearing houses were incomplete or nonexistent," reads the report of parliament tabled this week. 

"Silkworm rearing houses should have been constructed and equipped before planting the mulberry gardens; and the silkworms introduced towards the maturing of the gardens," said the committee.

"This would have ensured the achievement of tangible results with the silkworms producing cocoons. On the contrary, over 2300 acres of mulberry gardens were established in the absence of silkworm rearing houses."

TRIDI boss Dr Clet Wandui Masiga has since defended the operations of the project, attributing the challenges to the suspension of funding by the ministry of Science and Technology. Masiga said the project would have created many jobs and that the delayed release of funds saw the project fail to pay casual workers and contractors. 

However, parliament says the project was mismanaged and its operations should be streamlined to achieve its objectives. 

Mismanagement 

The project envisaged building 8 research and technology transfer centers over a period of five years at a cost of Shs 40 billion.

According to the timeline, by the end of June 2022, five research and technology transfer centers should have been built, but so far only two have been built in Kween and Sheema districts. The committee observed that the two newly constructed centers have neither been fully completed nor equipped. 

"The buildings did not have approved designs or drawings that would qualify them to be factory facilities; and they were constructed using poor quality materials that only qualified them to be temporary structures," said the lawmakers. 

The buildings had poor lighting, ventilation, and cracked floors even before they were completed, as was observed in Kween district.

For example, the facility in Kween district was located in a low-lying area that is prone to flooding, and if the area flooded before the machines were evacuated, they could be destroyed. The report says the shell house on Rubare Farm cost Shs 1.2 billion.

"The cost was not commensurate with the structure in place... The committee recommends that a forensic audit be expeditiously carried out to ascertain value for money for all the building structures erected under the sericulture project managed by TRIDI," said the MPs.

No titles 

Additionally, TRIDI reported having cumulatively purchased 870 acres of land at a cost of Shs 8.2 billion and acquired 50 acres under lease agreements at a cost of Shs 200 million.

However, the parliament committee discovered that all the land titles for the pieces presented were in individual names and not in the name of TRIDI or GOU, indicating that no sub-division and transfer of land ownership had been done since the purchase of the land. 

"This put GOU at risk of financial loss if the subdivision and transfer of the acquired land from private hands to the government are not done expeditiously. Some of the titles had encumbrances, meaning that no due diligence was undertaken before purchasing the land," the MPs’ report reads in part.

Lawmakers called for the immediate transfer of the land purchased by TRIDI with government funds to the Uganda Land Commission within 3 months and a report to this effect to be submitted to Parliament. 

"TRIDI should halt all land purchases until the previously purchased land is transferred to the government of Uganda and put to use, and the future expansion and purchases of land by TRIDI should be aligned to an approved business plan."

The committee was also concerned that workers at TRIDI had spent six months (May to October 2022) without pay, yet TRIDI had been receiving funds from the government until June 2022. The committee observed that as of October 2022, TRIDI had only gone 3 months without funds; therefore, at worst, the workers should have been demanding arrears equivalent to that period.

MPs also discovered that there was no evidence of an Environmental Impact Assessment (ElA) carried out to ascertain the extent of the threat posed by the silkworm eggs imported from China to Uganda.

"There was no meaningful engagement between TRIDI and Agriculture Research Institutions in the country such as the National Agricultural Research Organisation (NARO) to explore possibilities of local production of silkworms and agronomy best practices for mulberry in the country. This exposes the industry to reliance on imports of the silkworm eggs rather than opening up avenues for local production and research in the future," said the MPs.

The committee said TRIDI must work closely with the National Agricultural Research Organisation (NARO) to explore the production of silkworm eggs in Kawanda Research Station and that funding should be allocated to the silkworm egg production unit in Kawanda to feed the sericulture industry in the country.

Haphazard expansion 

The committee was informed that the project had made a 30 per cent deposit on additional machinery to be delivered to the Kween, Kayunga, and Nwoya project sites. It was noted that the project was expanding in an ambitious and haphazard manner in the face of limited resources. 

"The acquisition of machinery for multiple sites with none of the sites having the full chain of equipment to produce results is mirrored in the expansion of the project to 34 sites with none of the sites having the full sericulture value chain from mulberry growing to production and sale of silk products," the MPs said.

The committee observed that the mode of project implementation was unsustainable and illogical; the aspect of commercialization was reduced to activities that were not leading to the end goal of sales, exports, and profits in the long run, and that the government resources were wasted on expansion rather than focusing on the completion of existing activities up to the point of realizing profit.

The committee recommends that the ministry of Technology, Science, Technology, and Innovation halt the expansion of the project until the sericulture sites in Sheema and Kueen districts progress through the various stages of the sericulture value chain and the products are released to the market for sale. By URN, The Observer