It’s been more than six years since the AgriBEE Fund, a grant initiative by the government to help black farmers purchase equity in farms or invest in agro-processing and value-adding of their produce, but only one deal has been funded.
Part of it could be understood, as the AgriBEE Charter Council and the Department of Agriculture, Forestry and Fisheries argued because the fund was suspended for two years.
It was suspended because of fraudulent activities at the Land Bank which manages the AgriBEE Fund. But even today, three years since those activities prompted the fund’s suspension, the matter is “still hanging” as the department’s director-general, Edith Vries, put it in Parliament yesterday.
But although suspended, annual allocations from the Treasury continued to flow into the fund, R35 million every year since the 2006/07 financial year. Allocating funds to a course that is under investigation for fraud and whose activities are suspended does not make much sense.
But the funds continued to flow and the chairman of Parliament’s portfolio committee on agriculture, forestry and fisheries, Lulu Johnson, said farmers had been reporting to him that they were rejected left, right and centre by the fund.
Last year, the department received 67 applications for AgriBEE funding. The department recommended only six to go through the Land Bank’s screening and due diligence processes.
The fund excludes the purchase of farms, farming, forestry or fishing infrastructure at primary level making it difficult for previously marginalised farmworkers, who never owned anything, to buy equity even if they practically ran the farm operations themselves.
Now the Treasury has drained the entire R229m balance that the fund had in November and the department is crying foul that the government is reneging on its commitment to empower black farmers.
As the Adcock Ingram share price drifts – as much as all roads lead to “Africa expansions plans” in the retail, manufacturing and food producers’ race, once the companies hit the ground – they live to tell a different story.
Ask Shoprite, Woolworths and possibly Tiger Brands. The story becomes quite different when companies have to execute their strategies.
In Tiger Brand’s case, challenges at the Dangote Flour Mill have started to weigh down its operations. The group’s chief executive, Peter Matlare, had previously said although the company had experienced trading challenges in that part of the world, it has been able to improve some efficiencies and had invested in the upskilling of staff. During the last financial period, the group was able to restructure some operations which included improving the quality of some products and changing the trading form from credit sales to cash sales.
At a price tag of R1.5 billion, business at Dangote looked attractive, but it is becoming clearer now that Tiger Brands has been met by challenges from lack of skills to trading platforms.
In its annual results, Tiger Brands reported an operating loss of R389.2 million in Dangote. The food company has not shown any improvement in the first quarter of the current financial year. However, this has not deterred Tiger Brands as it makes further investments in Kenyan bakeries. It has bought two firms, Rafiki Millers and Magic Oven Bakeries in the hope it will grow presence in the country.
Challenges in trading in countries outside South Africa have seen two major retailers making a U-turn recently.
Woolworths exited its Nigerian operations after experiencing supply chain difficulties. Shoprite has closed shop in Tanzania and sold its three stores to the Kenyan retailer, Nakumatt. Analysts believe that retailers were finding the market harder because of brand loyal consumers.
Adcock Ingram’s shares surpassed the R55 level that most analysts reckoned it was worth in the absence of a deal – they reached R56.31 at close of play yesterday. Shareholders will be watching closely for any signs of some sort of transaction emerging once the dust settles on the seven-month long battle.
CFR’s Alejandro Weinstein and Bidvest’s Brian Joffe have already been making conciliatory noises, reinforcing the view that things will never be the same for Adcock Ingram.
The slump in the share price to around R60 indicates that Bidvest is showing a loss of about R400 million on the acquisition of its 34.5 percent stake, which was bought at between R54 and R70 a share.
It isn’t huge money in Bidvest’s life, but Joffe is known to hate waste.
The far bigger loss for Bidvest would be the lost opportunity of not trying to realise the considerable potential that he and Weinstein have seen in Adcock.
The deal has also cost CFR huge amounts of money. Although no shares were actually bought by CFR, the company not only devoted considerable management time to the transaction but incurred what must have been steep advisory costs.
The realisation that CFR, Bidvest and Adcock might all be better off if they can cobble together some sort of “arrangement” is presumably what lies behind the conciliatory comments being made so soon after the end of an unusually acrimonious control battle.
In an announcement to shareholders in Santiago, Chile, Weinstein said about the terminated Adcock deal: “We believe both companies will be able to explore other ways to realise the significant synergies we have identified, directly benefiting all shareholders.”
As things stand, Foord Asset Management is the major beneficiary of the battle for Adcock, having made a hefty profit on the sale – at R70 a share – of the stake in built-up during the seven-month battle.
Edited by Peter DeIonno. With contributions from Londiwe Buthelezi, Nompumelelo Magwaza and Ann Crotty.