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PCEA turns to members in bid to save its Sh1.7bn hotel from auction

Sunday March 24 2019

Presbyterian Church of East Africa

The Presbyterian Church of East Africa (PCEA) Secretary-General Reverend Peter Kania at a past function. PHOTO | FILE | NATION MEDIA GROUP 

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On Tuesday, March 5, 2019 Rev Peter Kaniah, the secretary-general of the Presbyterian Church of East Africa (PCEA), dispatched letters to the 56 presbyteries across the country calling on them to come to the aid of one of their real estate projects — the Sh1.7 billion Milele Beach Hotel in Mombasa.

“Greetings in Jesus (sic) name,” he wrote to the presbyteries, which represent the estimated four million church faithful. “We wish to take this early opportunity to thank you all for your wise decision to rescue our Milele Beach Hotel from being auctioned.”

INCOME-GENERATING

PCEA took over the hotel in 2007, continuing a trend nowadays where churches are sinking billions of their worshippers’ offerings into income-generating activities.

For mainstream churches that were established by colonial missionaries such as PCEA, which was founded by Scottish missionaries in 1891, business frees them from financial dependency on their mother churches abroad.

Secondly, as explained by Rev Timothy Njoya, himself a former PCEA minister, business also frees churches from dependency on political handouts for their expansion and growth.

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However, this model is now being called into question as illustrated by the many ventures that PCEA has engaged in but are not returning a profit.

Rev Kaniah’s letter to the presbyteries a fortnight ago was to urge them to raise Sh13 million each month in order to offset a loan of Sh761 million, which the hotel owes the National Bank of Kenya.

“All the parishes shall share Sh13 million per month for a period of two years during which the Head Office shall complete construction of the houses and sell them to clear the Sh761 million (debt),” he wrote.

The money raised will not go directly to the loan repayment, but will be used to finish construction of an apartment of 64 units, which stands next to the hotel but which has stalled due to lack of funds.

With the money, the church hopes to complete the apartments and sell them within two years in order to raise money to pay back the NBK loan. “We expect to raise Sh1.2 billion should we sell the apartments,” Rev Kaniah said. The hotel is valued at Sh1.7 billion, he said in the letter.

ANNUAL DIVIDENDS

All funds invested by the parishes over the two years, he said, will be converted into shares and will earn annual dividends thereafter from the hotel returns.

“Those parishes and presbyteries that are able can quickly raise Sh20 million, for which they shall be given one apartment that is likely to raise between Sh300,000 and Sh350,000 a month at 70 per cent occupancy,” he said, eagerly selling the idea to the followers.

During the two-year period, all ministers and staff tithes will be channelled to the KCB account of Kairete Ltd (Kairete means “rejoice” in Greek), a newly formed subsidiary company of the Presbyterian Foundation, which owns the hotel, he said.

“Presbytery clerks are also directed to ensure that the evangelists and staff support the venture with their tithes for two years,” he wrote, adding that parishes will make their contributions through standing orders, which have to be banked as from the fifth day of each month.

The presbyteries and the parishes will start making the payments on March 20. He thanked some members who had already contributed some Sh15 million for the project.

“Kindly note that this is for implementation but not for deliberation as per our Practice and Procedure manual,” said Rev Kaniah in his letter, which is copied to the senior-most official in the church, Moderator Right Rev Julius Mwamba.

FINANCIAL BURDEN 

The church bought the hotel, formerly known as Giriama Beach Hotel, in August 2007 from the late Eliud Mahihu who was the Coast Provincial Commissioner in the government of President Jomo Kenyatta. Mahihu, who passed away in 2008, was a PCEA elder. But the purchase of the hotel could not have come at a worse time for the church.

Five months after the acquisition, widespread violence that rocked the country following the disputed presidential results of the 2007 general elections severely affected the tourism sector.

A number of hotels at the Coast went under as foreign bookings dwindled while those that weathered the storm are yet to fully recover. Evidently, Milele Beach Hotel is among them.

In September 2016, High Court Judge Anne Omollo gave the NBK the green light to auction the resort to recover a Sh727 million loan balance (which has now risen to Sh761) from the church, but this was halted following negotiations between the church and the bank.

A senior member of the church who requested not to be named for fear of attracting backlash from its leadership felt that the church had departed from its core mandate of winning souls for Christ.

“This church, with its institutions, is terribly failing at that,” he said. “These institutions were supposed to lessen the financial burden of running this church but instead they are being mismanaged and the members have to bail them out time and again.”

On Saturday Rev Mwamba — who Rev. Njoya described as “humble as a dove” — declined to speak on phone and asked this writer to visit the church’s head office in South C for comment.

Contacted yesterday, Rev Kaniah said: “Write whatever you want to write about the church of Christ,” he said without addressing the key issues this writer had raised.

“Those are internal matters of the church,” he said.

DIVERSE INVESTMENTS

Rev Njoya defended the church’s leadership in the matter, saying members should even contribute more offerings than they are doing now. “I have seen a church member who drives a vehicle worth more than Sh13 million,” he said.

Generally, Lady Luck has not smiled on the church’s diverse investments, which now span the education, health, tourism, hospitality and insurance sectors of the economy.

In August 2007, the same month and year it acquired Milele Beach Hotel, the church also obtained a letter of interim authority to establish the Presbyterian University of East Africa (PUEA).

But more than 11 years after it was founded, the university is yet to obtain a charter and its future remains bleak, according to a 2015 letter from the head office calling on the church followers to make donations towards saving the institution.

“In order to attract students and be self-sustaining, it (the university) needs to be chartered,” wrote Rev Mwamba on July 31, 2015. “This requires a huge capital outlay of about Sh1 billion to put up the infrastructure, have the programmes accredited and hire staff among other obligations.”

Rev Mwamba called on the members “who are fully committed to the well-being of the Church” to contribute generously.

“We appeal to the members of the church through you (presbyteries), to support the university by donating from Sh5,000 to Sh200,000 or more at the members’ earliest convenience.”

The church held a fundraiser on October 15, 2015, but all these efforts failed to push the university out of its financial conundrum.

CHARITY ZEAL

An audit done by the Commission for University Education (CUE) last year found that the institution had unpaid arrears on salaries and allowances amounting to more than Sh600 million.

The CUE report said that staff had not been paid for two years and that the university lacked adequate resources to meet its obligations given the deficit realised in the four years under review, including the 2012/2013, 2013/2014, 2014/2015 and 2015/2015/2016 financial years.

Following the audit report, the then Education Cabinet Secretary Fred Matiang’i shut down the Thogoto-based institution by revoking its Letter of Interim Authority for failing to meet standards set by CUE.

But last October, President Kenyatta allowed the university to operate again. Nonetheless, our sources say that the university faces significant challenges and is not out of the woods yet.

PCEA has also entered the insurance business through a company Kirk Insurance Agency (formerly known as Jitegemee Insurance Brokers) through which it insures its property and staff.

PCEA was formed in 1891 as East African Scottish Mission to minister the gospel among the Maasai and the Akamba people, before being moved to Kikuyu in 1898, according to information on its website.

It is from here that the church spread to the larger Mt Kenya region where most of its followers come from. In 1945, the East African Scottish Mission merged with another missionary group from the United States calling itself The Gospel Missionary Society of USA to form PCEA.

Like most early churches founded by the missionaries, PCEA was long known for its charity and missionary zeal among the poor that led it to start some of the enduring health and academic institutions. The church sponsors more than 700 schools, both primary and secondary as of 2012.

'TAXING MEMBERS'

“The church participates in nation-building and operates several projects such as community centres, rural development projects, centres for weaving, homecraft, secretarial training for girls, HIV/AIDS control programmes, relief efforts and refugees,” says information on its website.

For decades, when healthcare was unavailable and expensive, poor ailing Kenyans from all over the country flocked to PCEA Kikuyu Hospital and PCEA Tumu Tumu Hospital for specialised medical attention.

However, the present-day financial demands passed on by the leadership of the church upon its own members to sustain the commercial projects whose viability has been questioned, has raised eyebrows among some of its followers.

“People who go to PCEA also want churches that are after people’s (sic) money shut down?” tweeted a church follower calling herself Galina Reznikov on Twitter during the debate on whether the state should start regulating churches.

However, Rev Njoya argues that such thinking is defeatist. “It is members who give officials power to run the affairs of the church, and therefore they cannot disown their liabilities. PCEA is not taxing members, it is collecting offerings,” he said.