Zimbabwe: Seed-Co Takes Vegetable Business Into Region
- Fri, 2015-06-19 (All day)
- Zimbabwe, Africa
ZIMBABWE Stock Exchange-listed seed producer, Seed-Co Limited, is planning a major regional expansion drive for Prime Seeds after it swooped on the vegetable seed breeding outfits recently.
Seed-Co pounced on the US$5 million business for an undisclosed amount recently, marking the Pan African seed giant's entry into the vegetable seeds market.
Seed-Co's business had largely revolved around maize, wheat and soya bean seed breeding.
Chief executive officer, Morgan Nzwere, said last week the group, which reported an 11 percent slide in turnover to US$95 million during the year ended March 31, 2015, would be rolling out a strategy to replicate the vegetable seed production business currently only in Zimbabwe, across all the markets in which Seed-Co has a presence.
Seed-Co turned over US$106 million in 2014.
"We have been talking to Zimbabwe's biggest vegetable seed company," Nzwere told analysts in Harare.
"All the discussions are complete," he said.
"What remains are just administrative issues. It heralds our entry into the vegetable seed business. Prime Seeds is only a US$5 million business at the moment. But we are going to be producing vegetable seeds in other markets. The plan is to replicate the model in other countries. There is demand for vegetables across the region," said Nzwere.
Last week, Seed-Co reported a 27 percent rise in profit after tax to US$15 million, from US$11,8 milllion in 2014.
Nzwere said there were great prospects in some of about six markets in which the Zimbabwean domiciled firm has extended its footprint.
He however said there were still hurdles in East Africa, where militant groups have wreaked havoc, creating significant instability.
In Nigeria, Nzwere said there were prospects for stability following the election of a new President early this year.
Seed-Co has moved its offices from Abuja to Kaduna, which is close to its operations, following the change in administration.
In Zimbabwe, government has paid off its debt after converting US$23,9 debt into three to five year Treasury Bills.
"Out of the US$44 million trade receivables, various governments across the region owed the group US$20 million, of which US$7,8 million was collected after year end," Seed-Co said.
Nzwere added that demand remained subdued in Malawi, which has been hit by donor fatigue blamed on rampant corruption in high offices.
In Malawi, Seed-Co has one of its strongest operations in Africa, and it enjoys warm relations with government.
In November, the government of Malawi said it would scale up efforts to support Seed-Co Limited, which has captured fresh opportunities in that market, as part of its African growth strategy.
Seed-Co commissioned a US$10 million seed production facility in Lilongwe in November, taking its cumulative investment into the southern African country, where it now controls a 55 percent market share, to US$15 million since 2000.
The Pan African group is projecting that its market share will climb to 60 percent by the end of this year, before it achieves a 70 percent target.
Seed-Co's operations are seen as central to future food security in Malawi, one of the world's poorest countries grappling with a defenceless domestic currency and corruption.
On November 11, 2015, Seed- Co consolidated its commitment to Malawi by commissioning the multimillion dollar factory, which processes 160 tonnes of seed maize per day, enough for the country's national requirements.
Malawian Minister of Agriculture, Irrigation and Water Development, Allan Chiyembekeza, said Seed-Co had significantly reshaped that country's agricultural landscape.
"A lot has changed (since Seed- Co arrived in Malawi)," Chiyembekeza said.
"We never used to have facilities like this before. Two years ago, this was an open land. Seed-Co started as a small company but it is changing the landscape in Malawi. It is very impressive. I appeal to other companies to emulate what Seed-Co is doing," said Chiyembekeza.