Zambian agribusiness company Zambeef Products Plc is looking to further boost its operations in Nigeria.
Zambeef is involved in the production, processing, distribution and retailing of beef, pork, chickens, eggs, milk, dairy products, edible oils, flour and bread throughout Zambia and West Africa.
During the 2010 financial year, Zambeef finalised a 25 year lease agreement for 287 hectares of farmland in Ogun State, 60 kilometres north of Nigeria’s commercial capital Lagos.
The company plans to use the land to create a central processing and distribution centre to supply supermarket group Shoprite as well as its own brand of Master Meat butcheries in Nigeria.
In Zambeef’s 2010 annual report, its chairman Dr Jacob Mwanza wrote that the company has completed the procurement of land and buildings in Nigeria to commence feedlot, abattoir, processing and coldroom facilities, and own outlets in the West African country.
One of Zambeef’s main clients in Nigeria is pan-African supermarket group Shoprite. There are currently only two Shoprite supermarkets in Nigeria but according to Bloomberg Businessweek it plans to expand the number of outlets to 20 within the next two years.
Zambeef’s relationship with Shoprite, however, didn’t deliver the desired results over the past financial year. “With Shoprite increasing its footprint during the year, it was expected that there would be significant growth. However, the main store in Lagos has undergone severe challenges due to access logistics whereby the roads leading to the store were closed for temporary construction works. Further, the new store that was recently opened had other factors affecting consumer spending. As such, sales through Shoprite have declined during the year,” the company’s CEO Francis Grogan wrote in the annual report.
The board of Zambeef also approved a US$10 million term loan financing line from International Finance Corporation (IFC). US$7 million of this facility will be used to fund the retail expansion and other ongoing capital projects of the Group in Zambia while US$3 million will be reserved for expansion in Nigeria.
Zambeef’s West Africa division, which includes its Ghana operations, currently contributes 3% to the Group’s turnover.