Forget gold coins, this local firm wants you to preserve value in cattle

Value preservation is the name of the game if you want to exist in Zimbabwe. With the local currency being a meme coin at this point, losing value faster than it can be printed, every Zimbabwean is trying all they can to retain value. To this end, Zimbabweans cannot be faulted for lacking inventiveness. Everyone and their great aunt have a side hustle selling something, be it assets, commodities or for the very bold ones out there seeking the arbitrage opportunity that lies in trading forex. Those are but a few of the options available on the market right now. If we are to list them all we would spend days and many pages cataloguing the entrepreneurial endeavours that Zimbos have been up to. In saying that there has been a new addition to the list of ways that Zimbabweans can make money and it’s something that we are all, to some degree or another, familiar with and it comes by way of a company called AgroStrong.

“Investments in cattle allow for the initial capital to not just maintain its value but to grow in line with or ahead of inflation.

AgroStrong

What is AgroStrong?

AgroStrong is a subsidiary of Lloyd Corporate Captial, a financial services firm which had its crowdfunding arm recently included in the Reserve Bank of Zimbabwe’s (RBZ) Fintech Regulatory Sandbox. The agricultural division of Lloyd Capital is looking to give Zimbabweans the opportunity to invest in cattle that are on a pan-feeding program.

Pan feeding is essentially how cattle are fattened for the slaughterhouse (abattoir) or auction. Prospective customers in this enterprise will be able to buy a share starting from US$15 (or R250) which buys you a unit or share of a cow.

“Once an investor has deposited their money with AgroStrong, the funds are used to purchase cattle – a trusted source of security and wealth”

AgroStrong

What are the returns?

According to the folks at AgroStrong, there is a minimum investment period of 6 months. After this period, the investor can either withdraw fully (capital and interest) or a portion of the invested amount. Any funds remaining after withdrawal are reinvested for another 6-month cycle.

As for how much you will make for a unit of cow you buy it’s in the region of between 8 – 12% per annum in US Dollars for Zimbabwe and 14 – 16% per annum in ZAR for South Africa.

So if you, for example, buy a single unit of a cow (which is US$15.00) you will be making between US$1.20 and US$1.80 per year. The terms are a lot better for South Africa, for whatever reason, but you can scale that up to however much you want to put to see if it makes sense for you.

Sound familiar?

This is an interesting proposal, but as we are all too aware around here that there is nothing new under the sun. Shares in livestock are scarcely a novel concept because companies like TN Bank and Mombe Mari launched similar projects in recent memory.

The former was widely different, what they were essentially offering was a chance to bank your cows in an initiative called the TN Livestock Trust.

“Cattle banking is the only way owners can get monetary value for their animals without having to sell them,”

Charles Chakoma, TN Bank Executive back in 2013 (via News24)

Owners would gain interest and have the option to get back their cattle after an initial two years or leave them with the bank for longer. If you were a depositor, you were able to get a loan on the back of the value of the cattle you deposited. In the event that you were unable to pay back the loan, TN Bank would claim the animal.

The latter, however, is closer to AgroStrong at face value. Mombe Mari is an initiative that is using livestock to retain value and use it as an investment opportunity. The company is backed by Silverback Asset Management Company.

Silverback is an innovative, specialized asset management firm that focuses on investment products that hedge investors against inflation and preserve investment value through commodity-based investments. At Silverback, investment is taken and immediately converted into units of a specific commodity, based on the current market prices of that commodity

Silverback Asset Management Company

They are equating livestock to an asset that they have formed a trust around. This trust is then furnished by those who want to be part of the program. Mombe Mari is serious about what they are about, the firm has a total land area of 65,000 Ha, 5,000 cattle, two Cold Storage Company (CSC) properties and three private ranches.

Animal husbandry is a seriously complex business

If you have ever tried your hand at animal husbandry then you’ll know just how resource and time-intensive it is. Animals of any size are a headache to do alone, especially when you are just starting out. I am sure there are those among you who have attempted rearing broiler chickens for consumption and sale and you’ll know that it is not for the faint-hearted nor is it something you can do on a whim. You need to be as present as you can be or hire someone who can take care of them.

AgroStrong, much like Mombe Mari, is looking to take away the element of being personally involved in the day-to-day and offering you a means to be in the game in an investor capacity. Moreover, AgroStrong isn’t doing this alone. If they were, then there would be some serious questions raised about the competencies they were able to build or acquire (by way of personnel) to meet the task.

The folks over at AgroStrong are working with MC Meats which has been in the game for nearly four decades. Additionally, MC Meats has a distribution network as well as the skills to be able to tackle the animal side of the business. On the business side of things, AgroStrong is has enlisted PNA Chartered Accountants (Zimbabwe) and Lumina Financial and Executor Services (South Africa) as its auditors. Additionally, the herd according to AgroStrong’s website is fully insured.

To circle back to the two examples given earlier (Mombe Mari and TN Cow bank), it appears that AgroStrong is looking to hybridize the two business models. In a statement from the company, they said that the money invested in cattle can also be used as collateral security for a personal or business loan.

Gold Coins or Cattle where do you stand?

I laughed the other day when I was in my local store as an elderly gentlemen remarked at a container of gold-wrapped chocolate coins and asked the teller “Ndiwo here maCoins aitaura panews?“. This was some excellent tongue and cheek because they might have been the same thing with the way that financial regulations change in Zimbabwe.

Read: Zim govt introduces gold coins which could be a game-changer, commitment to multicurrency regime commendable too

One day gold coins are in and the next they might be stricken from circulation by some overnight statutory instrument or decree. Livestock, on the other hand, is nothing like that, at least in my opinion. Meat might be expensive but falls out of the bounds of the RBZ and Ministry of Finance’s scope of regulatory whim.

I could ramble on and on but your input on this is invaluable. Perspective is hardly a one-sided thing, and I’d very much like to hear your thoughts in the comments.