Equity Bank Uganda and Equity Bank Kenya have reaffirmed plans to sell properties mortgaged by companies linked to Ugandan businessman Matthias Magoola, rejecting a legal warning that prospective buyers risk acquiring defective title.

The dispute, unfolding through competing newspaper advertisements, has renewed scrutiny of Dei BioPharma and its related businesses, which received cumulative government support of Ush723.4 billion, according to the Auditor General. The latest confrontation also raises questions about the application of public funds, reported loan repayments and the amount the banks are seeking to recover.

Equity banks reject borrowers’ warning

In a notice published in New Vision on November 10, Katende, Ssempebwa and Company Advocates, representing both banks, confirmed that the proposed disposal would proceed.

The lawyers linked the sale to an earlier advertisement by Jald (U) Ltd concerning properties pledged as security for loans taken by Dei BioPharma and Dei Industries International.

They maintained that the auction was lawful under Uganda’s Mortgage Act and did not contravene court orders, arguing that no court order had stopped or stayed the proposed sale. The firm also invited prospective buyers to participate.

The response directly challenges a November 9 notice by Muwema and Company Advocates, which warned buyers against acquiring the properties.

Dei disputes the outstanding debt

Representing Dei BioPharma, Dei Industries International and Magoola, Muwema argues that the loan accounts remain subject to a court-ordered audit and reconciliation process.

The lawyers say their clients paid Ush120 billion ($29.51 million) in December 2024 after the banks allegedly promised to refinance the Matugga pharmaceutical project. They contend that the commitment was not honoured and dispute the subsequent calculation of the companies’ indebtedness.

A replacement auditor, Clayton & Company, reportedly placed the outstanding debt at $39.91 million as of June 28, 2025. Dei rejects that figure.

The dispute follows the banks’ original demands of Ush82.24 billion ($20.1 million) under Ugandan facilities and $43.23 million under Kenyan facilities in June 2024. CEO East Africa reported that the combined demands amounted to approximately Ush243.25 billion ($60 million).

The parties’ competing notices do not fully reconcile the original facilities, the reported Ush120 billion ($29.51 million) payment, interest and other charges, or the current recoverable balance.

Government’s $176.68 million investment under scrutiny

The debt dispute has wider implications because the government committed substantial public funds to Dei BioPharma’s pharmaceutical manufacturing ambitions.

Auditor General Edward Akol’s December 2024 report recorded cumulative support of Ush723.4 billion ($176.68 million), including Ush578.4 billion ($141.32 million) approved as supplementary funding in 2024 to address debt obligations and operational requirements.

The FY2025/26 Budget Speech subsequently put government investment at Ush724 billion ($177 million) and reported that the Matugga facility had obtained National Drug Authority licensing and begun producing generic medicines.

However, the Auditor General raised concerns about the ownership rights secured in exchange for the investment. The audit found that government had not provided a shareholder agreement or share certificates and that the company’s net worth had not been established through a valuation.

Parliamentary scrutiny in October 2026 also highlighted the need for documentation of government’s reported 9.4% shareholding, expected returns and performance targets.

Properties remain at the centre of the dispute

Jald’s advertisement identifies properties in Matugga, Kyamuli-Kungu, Luzira, Katwe, Muyenga-Kisugu, Kitende and Seguku for sale by public auction or private treaty.

While Equity maintains that no court order prevents disposal, Dei argues that proceeding would undermine the unresolved reconciliation process. The precise effect of the relevant court orders remains central to determining the parties’ competing positions.

For prospective buyers, the immediate concern is whether the sale can lawfully proceed. For taxpayers, the broader questions are how government funding was applied, what ownership protections were secured and why assets linked to the pharmaceutical enterprise remain exposed to recovery.