The ZPA is pleased to announce that the Minister of Finance and Economic Development Hon.R.D.S. Penza has signed the Sale and Purchase Agreement with the Western Cashew Industries Limited.
Western Cashew Industries Limited is a company fully owned by the participating farmers in the Western Cashew Growers'Association and has purchased all the shares owned by the Government of the Republic of Zambia (GRZ) in Zambia Cashew Company Limited.
The price consideration agreed between parties is K100 million. However, the Purchasers are only going to pay One Hundred Kwacha to the Privatisation Revenue Account (PRA). The rest of the funds will be used as Working Capital in the Company and will not be transferred to PRA.
CDC, BP Africa Limited and Landell Mills who owned 30% of the share capital in Zambia Cashew Company Limited have surrendered their shares as gifts to the Association. Both the ZPA and the Western Cashew Growers' Association are grateful for the gifts.
Zambia Cashew Company Limited was incorporated in May, 1986 to promote on commercial basis the production, processing and marketing of cashew nuts in the Western Province. The Company was managed by Landell Mills Associates, an international agricultural management and investment company based in the UK. In September,1991 the company was taken over by ZIMCO (in liquidation).
The Company's head office is in Mongu, Western Province and has a small processing factory in Mongu and plantations in Mabumbu (1900 ha). It has also three other plantations in Kalabo (146 ha),Senanga (600 ha) and Lukulu (1000 ha). The Company also provides various technical support services to small holders mainly in form of extension advice, seedlings, spray services and the marketing of cashew nuts.
Historically the financial performance of Zambia Cashew Company has been poor due to a number of problems primarily the shortage of working capital.
The estates, small holders and processing plant have all failed to achieve even minimum financial targets.The Company as of October, 1996 was technically insolvent and its liabilities have considerably exceeded the purchase consideration achieved.
The ZPA, after failure by the company's creditors to put it under voluntary liquidation, advertised it for sale on a competitive bid basis in August,1996 and six bids altogether were received from the following:
i) Mr. M. Mwangala
ii) Mr C. Kandala
iii) Western Cashew Industries Limited
iv) MBO Team
v) High Protein Foods
Three of these bids came from Western Province.
After comprehensive evaluation of the bids by the ZPA Secretariat, the bid by the Western Cashew Industries Limited was found acceptable on the following grounds:
Western Cashew Company's affairs are overseen by a Board of trustees
whose composition is as follows:
Mr. M. Sinyinda GCDS - Chairman
Mr. H.M. Mutendango - Vice Chairman
Mr. S.L. Lubinda - Secretary
Mr. D.K. Kandala - Treasurer
Mr. K Mukena - Vice Treasurer
Mr. Richard Lubasi - Director
Mr. M.M. Muyenga - Director
Mr. Mr. K. Mubita - Director
Mr. L.N. Luyanga - Director
Mr. L.S. Nyumbu (Chief Chengele) - Director
Mr. Mubonda Milumbu (Chief Kandala) - Director
Mr. R.M. Mukuni - Director
Mr. Yusiku Mukelabai - Director
Mr. Sibeta Libala - Director
Mrs. C.M. Kabulembe - Director.
The negotiations were conducted by an Independent Negotiation Team appointed by the ZPA Board. Mr Nyambe Lubamba,former Managing Director of Development Bank of Zambia was the ZPA Board appointed Chairman for the Negotiation Team for the privatisation of the company and Mr Ngenda Sipalo was the negotiation team lawyer.
The Purchasers have undertaken to retain a significant number of the existing permanent labour force on their current conditions of service. The Purchasers have also pledged to continue to contribute to Zambia's agricultural and industrial development and intend to increase investment for the rehabilitation and replacement of the aged equipment and expand the production capabilities of the company.
The realisation of the Purchasers plans however is heavily reliant on them being able to procure finance from both the shareholders and lending institutions.
The acquisition by the bidders of Zambia Cashew Company Limited marks yet another crucial achievement in the Zambian Privatisation Programme. The ZPA is pleased with this increased level of participation by the local companies in the privatisation programme.
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