The Boma Hotels chain has been placed under receivership after failing to repay loans owed to National Bank of Kenya. The hotel chain is owned and run by the Kenya Red Cross. Its portfolio include The Boma Nairobi, Boma Inn Nairobi, Boma Inn Eldoret, and the upcoming Boma Inn Nyeri.
Documents show that the humanitarian organisation is the biggest borrower at the rundown bank. Current management has been barred from running the company after the appointment of PVR Rao as the administrator.
The hotel has been making losses since inception and had become insolvent as early as 2012. It was unable to pay retirement savings for its employees despite submitting taxes to the Kenya Revenue Authority.
The hotel chain is now under guidance to seek reviewed loan terms with lenders to enable viable repayment schedules. However, with the insolvency at more than KES 1.4 billion, this is going to be a tall order.
Kenya Red Cross also runs Switch TV which is targeted for youthful population. Several projects by the humanitarian organisation have been abandoned uncompleted even after sinking a lot of money in them. An investigation by the Nation found that even though the KRC claimed success of the projects in Northern Kenya, on the ground they appeared like white elephants. The abandoned Red Cross projects in Kenya include the Turkana North Food and Security Livelihood Project, the Chesimirion Dam in Tiaty, and other smaller water drilling projects.
The National Bank itself has battled with nonperforming loans which saw it also placed under receivership and consequently acquired by the country’s biggest bank by asset base, the Kenya Commercial Bank. NBK has a non-performing loan portfolio bigger than KCB’s despite being less than a fifth in size, both in the balance sheet and customer numbers.