Reports last week that a UK firm intends to invest around $240m in Agriculture over next five years, in what has been touted as the largest single agriculture investment this year. In the long term it is argued this could surpass ZAMBEEF PLC :
A British company intends to invest an initial K235 bn ($51m) in Zambia's agriculture sector starting this year. Chayton Capital operating as CHOBE Agrivision Limited further plans to invest over K1.1 trillion in Zambia in the next five years.Update (5 December 2009) :
Commerce Minister, Felix Mutati, and Chayton Capital Executive Director, Karim Ola signed an Investment Promotion and Protection Agreement in Lusaka on Thursday. Mr. Mutati described the venture as the largest single investment in the agriculture sector in 2009. He said CHOBE agrivision which will venture in Wheat, Soya beans and maize production will employee more than 1,600 Zambians. The company will develop 10,000 hectares and is expected to produce 60,000 tonnes of wheat, 45,000 tonnes of maize and 15,000 tonnes of soya beans per year.
And Ms. Ola said her firm will develop farms starting from Monze to Mkushi. She said Zambia is the first African country that is benefiting from Chayton Capital's business activities. She said the firm traditionally invests in emerging markets in Asia and Eastern Europe. CHOBE agrivision will become the largest agri-business in Zambia surpassing ZAMBEFF PLC.
More information on the Chayton Capital investment. The company representative, Neil Crowder revealed earlier this week what has attracted the company to invest :
He observed that among the incentives further attracting investment is the reduced duty by the Zambian government on imports relating to agricultural machinery and the farming dividends and profits tax-exempt for the first 5 years of operation. Others are the 100 per cent tax allowance for outlay on land development, conservation and wear and tear allowance of 50 per cent for the first two years on machinery employed for agriculture. Mr Crowder further said the 50 per cent depreciation rate, allowing machinery to be written off also contributed to the company's financial investment in the Zambian economy.
The "staged investment" must be seen in light of these incentives. It is quite possible that no more than $51m would be invested because with extent of the incentives would be sufficient for the company to recoup the profits and simply reinvest. In short to speak of additional $251m (or is it $241) is misleading because the $200 is presumably the excess profits they see making over the five year period, which they may reinvest.