THE ZAMBEEF $13.5M CHIAWA FARMGATE (part 2)
By Miles B. Sampa,
Matero MP & Patriotic Front President
August 11th, 2024
So we pick up from the earlier story of the Government of Zambia deciding to buy a farm in Chiawa from Zambeef at $13.5M so that our Zambia National Service-ZNS can cultivate the staple food Maize.
The idea of using ZNS for strategic food production and distribution is wonderful and I have no problem with it. To however ensure that ZNS does not fail on these strategic projects as they did during the UNIP era, the current UPND government should approach the venture somewhat different. They should get ZNS to instead partner with the private business community be it SMEs or Large Corporates to ensure the venture runs profitably. A 49-51% shareholding joint venture on each of their business project be it a farm would yield desired results in the short and long term.
My issue with the Zambeef farm is therefore not that Government is buying it for ZNS but how and why it’s buying it. Is it worth $13.5M? No it’s not. Here is why not..
1) Current Market Value of Zambeef
I googled this morning the LUSE stock page and showed me that the current market value of Zambeef is K 541 million. This figure divided by the current exchange rate of 25 means Zambeef value in US dollars is $21.5M . Not to forget this figure included all Zambeef farms countrywide ,they run chicken and pork processing plants, their shoes factory, their many retail outlets in all compounds etc.
So how in the World can this one farm of Zambeef in Chiawa sell at 63% value of the entire company?One farm becomes worth $13.5M (63%) of entire $21.5M value of entire company called Zambeef?
I can only state facts here and leave opinions to the readers judgement.
2) Someone argued that a farm can never be a wrong investment and that it always becomes profitable in the long run. That I am not a farmer and would never know. Incidentally my interest in the topic only comes in to the extent that the $13.5M being used to buy this farm is public money and I am paid to speak for the voiceless public where their money is not being used prudently. In any case I can confidently state that I have hardly seen any farm or farmer that has made profit from farming in Zambia. As a Banker back in the day we all rushed to Mr Costain Chilala to get him to bank with us because he was a successful farmer. Not sure can say the same about him today. He does not seem to have the farm wealth he was said to have had. Something happened. I struggle to mention any other Zambian name of a successful farmer. Until given one, farming remains a venture that is unprofitable and even as we invest $13.5M in a farm, may we be aware that it’s likely to be a sunk cost and not to give a profit into the Treasury. It may just break even. In the USA and Europe ,farmers make huge profit because their governments subsidize them heavily. In Zambia and Africa we don’t.
3) Then there is the issue of one or two Zambeef shareholders having one or two top government VVIPs as primary shareholders directly or indirectly. So they have influence on Zambeef operations but also have influence on government operations. It would therefore not be proper for government to spend $13.5M on Zambeef while they field government power and influence or at minimum publicly declare conflict of interest. As Zambeef is a listed company, all their records are found online and shows Africa Life Insurance as one of the Shareholders. It’s the same company that is linked to our Republican President HH . Nothing wrong with such investment and more so that he did so before he became the Head of State. Well now he is the Head of State and Incharge of our national treasury. He should therefore declare interest when the government or Ministry of Finance that he is Incharge of decides to buy a farm at $13.5M from a company (Zambeef) where he owns shares directly or indirectly as factually indicated above.
4) Then where are Government priorities to spend such huge amounts of money to the extent of $13.5M buying a farm when this money can be channeled towards the Cancer wards at UTH. Visited there recently and it’s in dire need of Radiation and Chemotherapy diagnostic and treatment machines. Thousands of Zambians across the Country are dying due to a broken medical system and this money is enough to make that single difference to our people’s health than throw it on a single farm whose productivity is not even guaranteed.
Conclusion: The British government that also has shares in Zambeef should be the one to bail it out or restructure its huge capital debt that falls due next few months. It should not be the Zambian government to spend money ($13.5M) it does not have to bail out Zambeef. Such money should be channeled to urgent priorities like into our hospitals in all districts Countrywide. The Zambian government’s role is not to be the business venture itself but to create polices that will enable SMEs and big companies be able to prosper so they create jobs.
MBS11.07.2024