Lake Basin Mall's Deepening Financial Quagmire in Kisumu: Sh4.4 Billion Loan Woes

The Lake Basin Mall in Kisumu City is grappling with severe financial difficulties. At the heart of the issue is an unpaid loan amounting to Sh4.4 billion, which includes penalties and interest. This predicament was spotlighted during an oversight visit by the National Assembly's Departmental Committee on Regional Development.

Completed in April 2016, the mall is under the management of the Lake Basin Development Authority (LBDA) and, distressingly, operates at a mere 30% occupancy. According to CPA Wycliffe Ochiaga, the Managing Director of LBDA, the loan has been accruing penalties since the mall's handover. The LBDA is currently in talks with its lender to suspend further charges, but repayment remains a daunting challenge despite receiving Sh2 billion from the government in the 2016/17 and 2017/18 financial periods for debt servicing.

Strategic Recommendations and Barriers

In response to these financial woes, committee Vice Chair Mary Wamaua recommended that the LBDA ramp up its marketing efforts. She also suggested reducing rental rates and considering partnerships for hosting public facilities, such as a Huduma Center, to increase foot traffic. However, the LBDA has pointed to poor road infrastructure as a major roadblock to improving mall accessibility.

The committee's visit wasn't limited to the mall; they also assessed other LBDA projects. Among them is the Sh300 million Nyakoe Market in Kisii, which has already seen Sh142 million invested in its first phase. They also inspected a Rice Milling Plant and a Fingerlings Multiplication Project, both in Kisumu. In a bid to tackle local drought conditions, a water project at St. Joseph Nalondo Girls’ was launched, targeting supply to 1,200 students and around 4,000 households, delivering 8,000 liters of water every hour.

Meanwhile, the Kisumu International Convention Center remains at a standstill. Managed by the state department for devolution, work has been halted due to unpaid contractors and a shortage of funding. According to Maurice Ogolla, representing the Principal Secretary for Devolution, these financial obligations remain a significant hurdle.

Audit Revelations and Financial Mismanagement

An audit has uncovered troubling instances of financial mismanagement within the mall’s administration. Notably, it was found that Sh79.9 million, which should have gone towards the loan, was diverted to unrelated expenses such as office supplies and legal fees. Unauthorized payments were made without the necessary board approvals, and there was a failure to establish a joint oversight committee as required by the loan agreement.

This poor management has added to the debt burden, with Sh370.7 million in penalties and interest paid to contractors due to construction delays. The situation demands urgent and strategic solutions if the mall is to navigate out of this financial mess and contribute positively to Kisumu’s regional development landscape.