Government to Lease Mount Elgon Lodge to a Strategic Investor

State abandons sale plan in favor of joint venture arrangement with private investor

The Kenyan government has made a strategic U-turn on the fate of Mount Elgon Lodge, opting to lease the state-owned hospitality facility to a private investor rather than proceed with its initial plan to sell the property outright.

The Kenya Development Corporation (KDC), which holds a controlling 72.91% stake in the Trans Nzoia County establishment, recently concluded its search for a strategic partner to develop the lodge through a joint venture arrangement.

This marks a significant departure from the privatization strategy announced in March 2024, when the Privatisation Authority had invited consultants to guide the sale of the lodge alongside four other state-controlled hotels.

Under the new leasing model, the government will contribute land and existing infrastructure while the strategic investor takes responsibility for financing, construction, and operations through a Build Operate and Transfer (BOT) framework.

“Mount Elgon Lodge Limited shall provide the land for development and shall not be involved in developing the property but will only be overseeing the project progression as a joint beneficiary of the final returns,” KDC stated in tender documents.

The 17-room facility sits on a sprawling 152-acre plot, with current hotel developments occupying just three percent of the available land.

The remaining acreage is currently under maize cultivation, presenting potential for expanded hospitality operations.

The strategic investor must demonstrate capacity for project financing and submit a comprehensive feasibility study including market analysis, investment cost estimates, and a financing strategy.

Partnership terms will be reviewed every five years, with transfer arrangements to be negotiated during the joint venture agreement signing.

This policy shift mirrors the government’s recent approach in the sugar sector, where leasing arrangements have been prioritized over outright privatization as a means of stabilizing struggling state enterprises while maintaining government oversight.

The Trans-Nzoia County government holds the remaining 27.09% stake in Mount Elgon Lodge Limited.

According to KDC records, the government’s 67,288 shares were valued at just one million shillings as of June 2022, though current valuations were not disclosed in the corporation’s latest annual report.

The leasing strategy represents a pragmatic approach to state asset management, allowing the government to retain ownership while leveraging private sector expertise and capital to revitalize underperforming properties.

Industry observers will be watching closely to see if this model proves successful enough to influence the fate of other state-owned hospitality assets.

The government’s stakes in four other hotels—including properties managed by Hilton, Intercontinental, Golf Hotel, and Kenya Safari Lodges—were collectively valued at 1.5 billion shillings as of June 2023, indicating the significant financial interests at stake in the broader state hospitality portfolio.​​​​​​​​​​​​​​​​