BY TAURAI MANGUDHLA
WITH advancements in digital currencies, one would naturally expect Zimbabwe’s financial system and or capital markets to be seized with understanding and regulating crypto currencies.
But the country’s capital markets regulator, the Securities and Exchange Commission of Zimbabwe (SEC), was for the greater part of this year inventing ways to regulate a capital preserving instrument in the form of actual kilogrammes of beef.
“It was not easy to put everything together and come up with a framework from a regulator’s perspective, but we are here today,” admitted SEC CEO Tafadzwa Chinamo at the official launch of what is undoubtedly a revolutionary product.
Typically, investors may buy shares on a listed counter which is perhaps into agriculture, cattle just being among the many assets, but this time one invests in actual beef kilogrammes under what is called the Mombe Mari Unit Trust Fund (Mombe Mari).
Mombe Mari is vernacular that loosely translates to “cattle are money” and this initiative borrows from simple investment solutions.
Cattle have been a sign of wealth across cultures and Zimbabweans are no exception with families boasting of large herds.
Quite often, beasts are sold for cash when the need arises, especially to pay school fees and medical bills.
This time around, the idea has been taken further, with proper systems that protect the investment and professional animal rearing skills combined.
The target return is up to 8% per annum calculated on live weight and converted to units that can accumulate interest.
It is not just the job of investment and capital market executives, but also seasoned cattle farmers who have a wealth of experience and knowledge in Zimbabwe’s livestock industry.
Mombe Mari is the brainchild of Silverback Asset Management Company (Private) Limited (Silverback) .
Baker Tilly Capital Zimbabwe (Baker Tilly) are the financial advisors on the project while CABS Trustee Services are playing trustees.
Silverback CEO Shaun Robert Edwards said the offer gives investors “a unique opportunity to invest in a capital preserving investment instrument, The Mombe Mari Unit Trust Fund, linked and secured by actual available kilogrammes of live cattle.”
Initially, the assets under management are cattle which are currently bred and raised by a successful cattle breeding producer in Zimbabwe, Fabwell Farming (Private) Limited.
“Looking ahead, Silverback will seek opportunities to partner with other established cattle breeding businesses in Zimbabwe with a view to growing the capital base of the fund which in turn provides capital for the businesses to grow and enhance the returns for the investor” Edwards said.
“Revitalising commercial beef production through a revival of the national herd with good genetics will create a stable platform for future industry growth.
“Priority will be to put the Zimbabwean cattle industry back on the international stage, which will drive export opportunities and future prospects of foreign currency generation.”
According to statistics, Zimbabwe’s national herd is approximately 5.5 million head with a large percentage (90%) being held by small scale farmers.
The country’s beef herd has gone down from a peak of 14 million head in the 1990’s.
Most of the cattle breeds being of the indigenous Mashona, Tuli and Nguni breeds.
Less than 10% of the national herd is commercial hence a smaller component of foreign breeds such as Brahman, Angus and Limousine.
According to a prospectus seen by this publication, the trust fund is unitised through investments in notes secured by kilograms of live cattle and it is an open-end fund.
Each Unit is denominated into 100kg of live beef cattle, secured by actual cattle managed on behalf of the management company.
The initiative is targeting existing established cattle producing enterprises with a proven track record.
Silverback Asset Management Company (Private) Limited is offering an investment into its Mombe Mari Unit Trust Fund.
“Each unit shall represent an investment in 100 kilogrammes of live beef cattle,” Edwards said.
“This value in kilogrammes shall be the basis of all principal and return computations.
“The monetary price of each Unit calculated on settlement date, is based on the prevailing CC Sales livestock auction prices per kilogramme.”
Part of the company’s prospectus says: “The management company shall receive requests for issue or redemption of units every Thursday and Friday or the preceding working days should any or both days fall on a public holiday.
“Dealing time shall be between 0900 hours and 1200 hours at their offices.
“The management company shall quote the requests within four hours of pricing/valuation point.
“The management company shall settle all redemptions within sevendays of the last valuation point,” read part of the prospectus.
“The accounting period for the fund is fromJanuary 1 to December 31 of every year, the half year ends on June 30 of every year.
“Bonuses can be paid periodically.”
Silverback has imposed a minimum initial investment of one unit, representing 100 kg of live beef cattle.
The actual Zimbabwe dollar equivalent is dependent on the prevailing CC Sales Livestock Auction’s live beef cattle price.
The main objective of the Mombe Mari Unit Trust Fund, is to create a vehicle for investment into the beef industry in Zimbabwe.
Fabwell Farming runs its beef cattle production operations across various ranches with a carrying capacity in excess of 20 000 head of cattle.
Currently, the company has 5000 beasts and hopes to hit more than 6000 early 2022 after calving.
The company selects the best breeds and employs professional techniques to get the best result.
James Chitupa of Baker Tilly said watertight systems have been put in place to secure the investment and make sure investors get a decent return. This comes amid indications a similar concept may be replicated with sheep, goats and even chickens.
While we wait to see the uptake on the market, Silverback already said it had a number of investors registered by the time of the launch last week.