A 60,000 hectare estate, situated near Zambia's copperbelt mining region is to go on sale. Tom Nevin recently toured what has been described as one of the biggest and best farms in Africa to assess its worth. Here is his report.
A Search is on to establish the next owners of one of Africa's biggest farms - and today one of the continent's most sought after agricultural enterprises.
The Zambian agribusiness Mpongwe Company (MDC) is a star in the crown of CDC Capital Partners' (formerly Commonwealth Development Corporation) agricultural holdings. The 60,000-hectare estate is situated near Zambia's copperbelt mining region and produces an annual crop of around 78,000t of wheat, maize, soya and coffee. A flourmill, a wholly-owned subsidiary, is located in nearby Kitwe.
"Mpongwe is one of African agriculture's best-kept secrets," says MDC chief executive Patrick Tobin. "In the past 23 years, the enterprise has grown from a vision of what can be achieved in Africa, to the fulfilment of the dream itself. It's difficult to describe what Mpongwe is today; it's an agribusiness success story that must be seen to be believed."
The MDC operation is made up of three arable farms and a coffee estate, situated in one of the region's most agriculturally productive areas with good rainfall, soils and irrigation water. These vital conditions enabled the production of some 25,900t of wheat, 33,000t of maize, just over 17,000t of soya and nearly 2,000t of coffee last year.
The flour mill processed and packed over 16,000t of flour in the same period, exclusively from wheat grown at Mpongwe.
Produce is exported or sold at dollar-denominated prices, mainly into the nearby markets of the copperbelt and Democratic Republic of Congo (DRC). Other lucrative markets, such as South Africa and selected SADC countries, are opening up as market penetration is achieved and regional tariffs are restructured or fall away completely.
MDC's flourmill, operated by its subsidiary, Mpongwe Milling Limited, is being disposed of separately.
Profitable, cash-positive and able to remit earnings to its overseas parent, MDC operates in a growing Zambian economy that places a high priority on the promotion of foreign investment.
CDC's changing role
"CDC is disposing of its controlling interest in MDC to realise shareholder value and to rationalise its agro-industry investments in order to reinvest in new projects in the region," says Tobin. CDC's 89% shareholding in Mpongwe is available for purchase. The balance of the issued shares is held by the Zambian government. The sale of Mpongwe, along with selected other agricultural holdings in Africa, is a result of CDC's decision to reposition itself as a risk capital investor, operating on a fully commercial basis. By doing this successfully, CDC is aiming both to encourage the private sector to invest in CDC and to stimulate increased direct private sector investment into the emerging markets.
While the CDC's operational focus has shifted, its target environment of emerging markets remains unchanged. As chairman Lord Cairns notes in the...