When Zambian-born Veronica Chungu graduated from Anglia University in Essex, UK, in 1997 with a B.A. degree in Business Management and Hospitality Industry, the timing was perfect.
The Zambian mining industry was in the process of being privatised. The ensuing mining boom would eventually present her with the opportunity to create what would become Solwezi’s foremost hotel, used by business people, government officials and State Presidents.
The Kansanshi Hotel is an example of what economists call the multiplier effect
Graduating in the UK had taken Veronica five years of assiduous studying, and substantial financial assistance from her brother and sister. To help pay for her rent, she’d worked weekends at a local Bed and Breakfast. “I was clueless,” she says, recalling her first day at work. “I had to be shown how to clean a room, make beds, fold the corners properly and so on. I cleaned fifteen rooms in two hours! Then I had to help out in the restaurant. It was great experience.”
An appetite for hard work, coupled with an engaging and friendly personality, made her time at Anglia University enjoyable and rewarding. In her final year, only 10 student dissertations had been rated good enough to be kept in the university library; hers was one of them.
Veronica went on to work in London in a variety of high-level roles – for the 5-star Langham Hilton hotel, the London Mayor’s office, and the UK’s Department for International Development. She also got married, became Mrs Veronica Ryder and started a family.
During that time, the post-privatisation mining boom was roaring ahead in Zambia, changing the economic landscape beyond recognition. It was about to change her life too.
“Aunty, the mines are in Solwezi!”, her nephew told her excitedly during a visit to London. “Solwezi is booming. You must go. You must invest!”
Veronica heard a breathless story about a new Eldorado, where people were rushing to find jobs, set up businesses and buy land. Apparently, land values were rising so fast that some people were paying off their mortgages in under a year. A leading hotel was booked out for six months. It all sounded surreal. Her husband, a management consultant, did some research on the internet; the story checked out.
“We bought tickets and flew to Zambia to see Solwezi first-hand,” says Veronica.
They discovered a chaotically vibrant town that had shaken off the cobwebs of years of stagnation, and was embracing its new status as a booming mining capital. Roads were being built; infrastructure was being upgraded; markets were mushrooming at roadsides. A sign at the entrance of the town said it all: “Solwezi – where everything is happening!”
“We went to the council and said we were interested in buying land to build a lodge, but they told us all the best land had been taken,” says Veronica. “But it turned out the Mayor had a piece of land he wanted to sell.”
Veronica and her husband met the Mayor, who took them to view the land. It didn’t look very attractive – it was overgrown, with lots of anthills and what looked like a quarry (see picture below).
“But we could see the potential – the trees, the stream, the valley below, the sky above,” says Veronica. “We fell in love with it straight away.”
An offer was made and accepted immediately. The couple started a company and engaged an architect to start work on a plan. They flew back to London elated. After the council told them more land was available, they returned to buy four more plots of similar size. The total stand size was now 4.5 hectares.
Construction started almost immediately, in late 2007. The safari-style business hotel, with thatched roofs and separate living areas, started taking shape. It involved some 100 construction workers over two years.
The couple’s initial capital came from money borrowed against the value of their flat in London, their savings, and loans from friends and family. The plan was to a get a bank loan in Zambia to complete the construction.
“That’s when the problems started,” recalls Veronica. “We needed a titled property to which a mortgage could be attached.”
Problem one: Various people disputed the purchase of the plots, arguing that the council had mistakenly sold land belonging to them – this prompted demands (mostly spurious) for compensation.
Problem two: it proved a two-year nightmare of bureaucratic delays, fruitless meetings and wasted trips to government offices all over the country to have the plans and title deeds finalised. In the end, it only happened when Veronica belatedly discovered that her sister’s husband knew the Surveyor-General at the Lands Department; the matter was sorted out within 20 minutes.
Problem three: despite a solid business plan, and having put up half of the capital themselves, no Zambian bank would provide them with funding. “They loved the idea of the project, but they didn’t lend money to start-ups,” recalls a frustrated Veronica.
So, her husband went online and Googled “Banks in Africa that will give loans to start-ups”. The search yielded PTA Bank, a development bank in Kenya, that referred them to an investment firm in South Africa. Veronica and her husband flew to Johannesburg and made their case. “They were impressed and immediately saw the potential,” says Veronica. “They called the Development Bank of Zambia and motivated our case.”
It worked. The Development Bank of Zambia eventually granted them a $1.6 million loan in 2009. The money came just in time, as the Ryders had pretty much exhausted their initial capital. “Those were tough times,” she recalls. “We were we on a steep learning curve, and had to re-think things every week.”
The loan enabled them to finish the construction; equip bars, kitchens and offices; and fund the extensive decoration and fittings for the rooms. The Kansanshi Hotel opened on 30th January 2010, with a ceremony attended by local chiefs and the Provincial Permanent Secretary.
“The first few months were difficult, because nobody had heard of us,” says Veronica. She and her husband went out on the road to market the hotel to potential clients. They got the hotel spoken about in the media and on television. It helped that they had deliberately named the hotel after the mine, as it made Google searches a lot easier. Gradually, business started flowing in.
“Our big break came when someone from Kansanshi Mine, needing regular accommodation for teams of up to fifteen people, tried us out. He liked the place and put us on Kansanshi’s procurement list,” she says. “Word of mouth did the rest.”
In 2011, the then State President, Rupiah Banda, stayed at the hotel and put it on the map. The same year, Veronica was named Woman Entrepreneur of the Year.
The hotel’s best years were from 2011-2014 – the peak of the global mining boom – with occupancy rates of around 90%. It helped to pay off the loan and break even sooner than anticipated. The last few years have been tough because of the recent global mining slump, but business is slowly starting to pick up again.
“We’re very optimistic for 2017 and beyond,” says Veronica. “Roads are being repaired, and the government is actively encouraging investment. We’re getting business not just from Kansanshi Mine, but also prospecting firms like Rio Tinto, Anglo American and MMG. Imagine if they actually found something big!”
Kansanshi Hotel is now home for the Ryders. It is frequented not just by business people, but also government ministers, Permanent Secretaries and State President Edgar Lungu himself. Its broad range of facilities include rooms, suites, and villas for long-term rental.
The hotel employs more than 60 people, ranging from chefs, waiters and barmen to housekeepers, gardeners, maintenance people and security guards. Veronica is particularly proud of her employees, many of whom have gone on to build their own homes.
The hotel injects some K300 000 into the local economy every month through wages, the purchase of supplies (mainly food, toiletries and hardware), and taxes and employee benefits. Since the first brick was laid back in 2007, Veronica and her husband have invested just over $5 million in the hotel.
The story of Kansanshi Hotel – and countless other local businesses – is an illustration of what economists call the “multiplier effect”. The presence of FQM Kansanshi Mine and Barrick Lumwana creates demand for goods and services in Solwezi that goes beyond mining. Businesses expand and new businesses are started to meet this demand. Jobs are created, which results in new spending, which creates more jobs – and so on.
“What a journey it’s been!” says Veronica. “It hasn’t been easy to start a business in Zambia; but it certainly has been rewarding.”
See Also: The “Solwezi effect”