Farmvest acquires shareholding in Lesotho firm

LOCAL agricultural investment promotion and facilitation firm, Farmvest Agricapital has acquired a 49% stake in the Lesotho firm, Kindobannis Proprietary Limited (KPL), to produce medical cannabis products.

KPL was awarded a licence to cultivate, manufacture, supply, hold, import, export and transit cannabis by the Lesotho Health ministry.

KPL was awarded the licence in May 2018.

According to a partnership agreement seen by NewsDay Business, Farmvest will register a joint venture with KPL in the United Kingdom called Cannivest

Limited to source capital to produce medical cannabis products for export.

“Going forward, Cannivest Ltd will be the holding entity that will be used to raise capital for cannabis licence in Lesotho. Farmvest Group UK will use its extensive network to raise capital for the project,”part of the agreement read.

“Both parties agree to not enter into any other agreements with the other parties with regards to the licence owned by Kindobannis Pty Ltd. Any conversations with third parties will include all partners in Cannivest Ltd.”

The cannabis licence allows the company to use three hectares of land for the planting of the green leaf for medical purposes and or scientific research.

The agreement between Farmvest and KPL was signed last week.

Farmvest says it is targeting revenues of up to US$20 million annually from the joint arrangement.

Farmvest Agricapital chief executive officer and founder Michael Matope told NewsDay Business that they failed to launch a similar project sometime last year with some Canadian investors after government had requested for a 40% stake in the proposed project.

“We had looked into getting a policy licence last year, but because of policy inconsistency here, we decided to look elsewhere. We found a company (KPL) that already had a licence. We actually had people from Canada who came and had conversations with government here with all sorts of departments, but when they heard government would take 40% of the cannabis licence, they pulled out of the negotiations,” he said.

“The requirement was the 40% of the licence be owned by a government entity and that you had to grow under State land or land owned by any one of the security sectors, either the army, police or prisons.”

He added: “Building a cannabis plant is expensive, so I think the government just saw the bottom line to say ‘ah cannabis you can make X amount of millions per year per hectare’ and I think they assumed 40% of the revenue would come to them”.

He said the difference with Lesotho was that 100% would be owned by foreign investors or local companies that partner foreign investors, which is what led to the signing of the deal with KPL.

The Zimbabwe government has a history of losing billions of dollars to neighbouring countries as investors opted to do business in those countries where property rights were guaranteed.

Such inconsistencies led the Health and Child Care ministry to reverse its previous stance requiring that all cannabis licence holders cede 40% of their business to State-owned entities.

Government began approving the production of cannabis for medical purposes in 2018 with 37 local and private investors being announced as having shown interest last year.

However, since that time, companies are yet to show any signs of progress which has largely been blamed on government bureaucracy.