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‘A really big opportunity’: Inside PSG’s $46m Zambian farming deal

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The group spent three days at the farm – a visit that, according to Meyer, opened their eyes. “We were very impressed with what we saw. Many people have this picture of Africa as the dark continent with no infrastructure, crime and terrorism, and bad leadership. What we found surprised us.”

After the visit Zeder pushed hard to make the deal happen. “We thought that this was really a big opportunity. We worked through a variety of financial models and, taking into account all the risks and price volatility, felt that the investment could generate a good return.”

In March this year Zeder bought a 96% stake in Chayton for $46.7 million ($37 million of this is to be released in stages to take advantage of specific opportunities).

Dealing with the risks

There is often a perception among foreigners that an investment in Africa comes with high political risk. So why does Zeder feel comfortable with Zambia as an investment destination? Meyer says the company is encouraged by Zambia’s relative peace and security as well as its political stability.

However, if something goes wrong, the investment is covered by political risk insurance from the World Bank’s Multilateral Investment Guarantee Agency (MIGA). “In the case of any trouble, we are covered for all the capital that we invest in Zambia. For us who work with shareholders’ money it is incredibly important to cover our risks as far as possible.”

In addition, Chayton has also signed an Investment Promotion and Protection Agreement with the Zambian government. Among various things outlined in the document, it allows Chayton to continue to export commodities in the event of a closure of the country’s borders.

“Although this investment looks very good on paper, we are not naïve to think that there aren’t any risks,” concedes Meyer.

Another positive is the Zambian authorities’ strong focus on agribusiness. The corporate tax rate for agribusiness companies was recently reduced. “The government realises the importance to develop industries outside of the mining sector.”

Chayton’s land is part of a designated farming block that was bought by the government from local chiefs. To attract investment the government has supplied infrastructure such as roads and electricity. The land can be acquired on a 99 year lease. Meyer says there are currently around 90 farmers in the area from countries across the world such as Zimbabwe, South Africa, the US, Australia and Russia.

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  • http://gmail.com rahil

    Yes I am highly interested in participating with your farming deal in Zambia.am an Indian Farmer more or less how can i get long lease lands,how about taxation can you contact me with details with price… Mr Liebenberg

  • http://www.villadeghaap.co.za Pannie (Lieb) Liebenberg

    I have introduced myself on your article on your website but was in short.

    I would like to reintroduce myself to emphisise my seriousness!

    My father started farming near Chisamba which later became the hub of Afrikaans speeking farmers. He was very successful and became the tomato king in the Federation of the Rhodesias and Nyasaland being the only farmer that could produce vegetables in the summer. Further he was a successful cattle and sheep (only) farmer. He left Zambia as my mother was diagnosed with cancer and set a ultimatum for my dad to go back to South Africa.

    I was at school and hostel in Lusaka which I see still excists. I am a Civil Engineer with the highest qualification of MBA. Since qualifying I have mostly been in my own business. I have 15 years of experience in irrigation (pivots) cultivating corn, wheat, cotton and groundnuts.

    Yes I am highly interested in participating in your farming deal in Zambia. During more or less 1983 – 1984 I had the privilege to do a large addition to Jannie Mouton and Dana’s house in Northcliff.

    Regards
    Mr Liebenberg
    082 415 9668

  • http://www.villadeghaap.co.za Lieb Liebenberg

    I am an old Zambian where my father farmed until 1962. I am eager to go back to farm or have a part in developing the beautiful country. I hope Iam at the right place.
    Groete vir Jannie 1982 laas gesien