Botswana Development Corporation (BDC) has taken full control of Milk Afric, paying zero thebe for the transaction but assuming the obligations of the troubled dairy project.
Launched amidst much pomp and fanfare in 2016, Milk Afric was set to revolutionise the country’s dairy sector, erasing the dependence on South African products and resuscitating Lobatse.
The BDC, government’s investment and diversification agency, partnered with US investors to bring the concept to local shores, pumping P40 million into the project for 26% equity.
The venture has since apparently failed to take off despite donations of machines and land from stakeholders.
According to the BDC’s latest financials, made available this week, the Corporation’s initial investment in Milk Afric had dwindled to a value of P8 million by 2018, after the venture failed to get off the ground.
The BDC has loans outstanding amounting to P31.4 million in Milk Afric, according to the financials for the year ended June 30, 2019.
The financials show that the BDC wrote off its investment in 2018 but in the 2019 financial year, took over full control of Milk Afric in a cashless deal, assuming the venture’s liabilities.
At the time of taking over of Milk Afric, the venture was insolvent with its liabilities outstripping its assets by P1.9 million.
The Corporation appears to have injected more equity into Milk Afric as a figure of P12.1 million is noted as the carrying amount of the
“The group has taken full ownership and has control of the project until further notice, effective from the beginning of the year,” reads a note accompanying the financials.
“No additional consideration was paid over and above the cost of the shares that had been subscribed to, for the 26% stake paid for during the 2018 financial year.
“In addition, the transaction had no impact on the cash flow of the group and company.”
At its launch, Milk Afric had been expected to prop up Lobatse’s struggling industrial sector and it got off to a promising start, with strong government support. Local students were sent to Florida in the US for training at a tune of P300, 000 in tuition fees for each student.
Shovel Projects, the company awarded the tender to build a milking parlor at Milk Afric’s dairy plant, by then said the project’s model of dairy production was one of the best in the world.
Milk Afric was expected to create 250 jobs in its first two-and-half years. The venture had signed a processing agreement with Parmalat and also roped in the Lobatse Town Council from whom a 25-year lease for a dairy farm was signed.