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
On priority I think you mist it sir, food is more of a priority than conventional medicine in hospital. Growing food is one very important medicine. Otherwise on figures you seem to have a big point and am interested as well.
I think Miles Sampa has got a point here. The UPND Govt has got its priorities right still but NOT spending $14 million on failed farm. That’s too much, and clearly the Farm is overvalued and indeed someone is benefiting.
I think the president is personally benefiting unfairly from this one transaction.
So how is he going to fight corruption with this clearly dirty deal alone? This is HH’s scam.
I am impressed by your analysis. I also applaud you for questioning deals that smell of corruption.
The problem with this government is that they do deals in secret. We depend on Mwamba or Fred to expose dirty dealings.
It makes me very sad that fight against corruption never took off in 2021.
At least Chilyata is objective, he does not just support, because it is HH or UPND, I hope we had more of his kind. We have supposedly intelligent people who have got ensnared in the antics of political gymnastics who have no interest in Zambia as a Country but in self gain.
Our words and contributions are taken more seriously when we are seen to be objective, fair and non partisan.
Company valuation is not an exact science. There are several methods used and all have their own limitations.The stock market does not always price shares correctly. If Miles Sampa does not know that, he had better stop commenting on this matter.
If government had bought shares on the market, they would own 63% of Zambeef and includes all tangible assets like the Chiawa farm. So Miles has a point.
Mr. Miles Sampa you are a banker and will just dwell on your first point.
As a banker you have lent money to individuals and entities. When a client fails to pay back the loan. You recover whatever assets that were plegded as security.
Does that mean that you will recoup your loan and interest if you sell the asset if it was a business as a going concern? Sometimes as bankers you will tear down the business and sell asset by asset to recover more of the loan than yoy would if you sold the business.
This farmgate revelation is what we have been told by Ambassador of lies Mwamba. One side of the story. That could sadly dent the share price of Zambeef. But the point I make is that we dont know the full picture all the financials or if the assertions made by Mwamba are infact accurate or just malious to Slander individuals in this case Muna Hantuba, Valentine Chitalu and the Head of State.
We also saw entities that Mwamba suggests are linked to the two by way shareholding. The who what where and how of those entities we are left to guess and believe based on what Mwamba says. But I saw a number of firms and ask how and which one is owned by Valentine and Muna? Africa Life Financials? Who to me owns shares with NAPSA and two other institutions.
And how this document links the other two documents. So before we jump the gun, like we heard with Jayjay and the abduction narrative. Lets have the facts. Zambeef Board Chairman is the ideal person to explain this transaction.
Sadly, ZNS again, seems to be at the center of another issue and the role of ZNS needs to be clearly defined.
From construction to farming to being “Home guard in times of war”. This organisation’s role needs to be clear. Before it is thinly spread in its function/performance.
Gunners and MULENGA sometimes it’s better to be quiet. Miles Sampa is an expert in this earlier of company values and the like. And amb. Mwamba should be appreciated you like it or not. He brings out information as it is and does not dilute it with personal opinion so you slandering amb. Mwamba is total childishness. And you can not say that we Don’t have full information since when did upnd start giving full disclosure of gvt transactions? The issue is one farm can not be sold at 63% of the total value or possible selling price of the entire zambeef awee.
Noted Ba Chisala. I beg to differ. Mwamba brought out something.
1. A transaction that of state institution that was not made public.
2. The possibility of a conflict of interest.
What I have a problem with Mr. Mwamba is his motive. This article makes assertions. Are the balanced facts or slanted to malign? Because of that it may damage Zambeef. Remember its a Publicly traded company.
As for Mr. Sampa his background is Banking. Expert? That is relative. Miles Sampa was an executive at two banks. Barclays and Finance. Does that make him an expert? From the comments in articles on the Zambeef issue. Someone points out that Valuation is not an exact science. Its subjective in nature. This why some people are highly critical about the ZPA pricing of Companies sold under privatization. Miles Sampa’s assertion is only one way of looking at the sale. I suggested another option. We can speculate all we want until speak to Zambeef and understand their rationale.
What we all seem to be stating are opinions based on elementary facts. Has anyone actually looked at their from before 2008 (when Alex Nkosi states that Zambeef started selling off parts of itself?)
I reiterate that the kind of journalism that Mwamba practice lacks objectivity. As he heard about a transaction and went to town.
Lets ask if Valetine Or Muna benefited from the transaction personally? If so how? They didnt sell shares in Zambeef. Zambeef sold an asset and the money went to Zambeef so why bring the names of indivduals into a transaction that occured between two institutions? Is that not malice in itself? So what if Valentine and Muna through African life have invested in Zambeef? Is it not said that Edgar Lungu had shares in Wonder fimo fimo prior to its sale to IDC?
To me the issue is why Zambeef is selling. Mwamba is just a very malious person who sells innuendo and not balance facts. For all we know the leak may have been leaked from financials but whoever told Mwamba and Mwamba dont seem to have the facts or just want to paint a particular narrative.
So while I appreciate your point of you, Mwamba, Sampa and Nkosi in their articles dont give us the bigger Picture of what is going on at Zambeef. They attribute their statements to information that is laying around but have not spoken to the institution or its representitives. Why is Zambeef selling. And it has been doing so from 2008.
Valuations are subjective. Like Demand and supply is driven by various factors.
Please show us how you arrived at 63%?
Lets stop these pronouncments
https://drive.google.com/file/d/10ER_Obxi9GITZbN7VVwpoz8eY9bqSjUz/view for zambeef financials as at 31st dec 2023.
The political spectrum is judged by perception, that is why it is important to not only be transparent but also to be seen to be transparent. When acquisitions are done on behalf of the nation (in this case within the nation) they have to be explained fully before they are done to remove perceptions that may arise. This transaction in particular has caught many by Suprise because it was not either explained or well explained before it was acted upon, and it is only after it has been done that people are now trying to understand it. As an observer I tend to not agree with the rationale being put forward to justify such an Aquisition because it was just lumped on our plate without our knowledge. It is such things that bring out negative perceptions and government ought to know this fact. So, if government knows this fact and went ahead to implement before explaining it to the people adequately then it was done deliberately. If something is done deliberately then the doer does not care about the feelings of those they lead. THAT TRANSLATES INTO TAKING PEOPLE FOR GRANTED AND SHOULD NOT BE CONDONED AT ALL. Please people in government, avoid such issues.