How M7 million was lost in cannery project

How M7 million was lost in cannery project

MASERU – THE Lesotho National Development Corporation (LNDC) pumped a whopping M7 million into a cannery project that collapsed before it could sell a single product.
Wholly owned by the LNDC, the Basotho Fruit and Vegetable Cannery, was supposed to create jobs and generate foreign currency through exports to Europe.
It was meant to be a shining example of a partnership that included a local business, foreign company and a government department.

This was the kind of project in sync with the LNDC’s mission “to stimulate broad-based economic growth through initiation, facilitation, promotion and retention of diversified sustainable medium to large domestic and foreign investments”.

Montara Continental Limited, a subsidiary of a London-listed company Obtala Resources Limited, had promised to invest M30 million into the project.
This was in addition to its claims that he had expertise in the cannery business and access to markets.
The cannery was going to be run by Mountain Kingdom Foods (Pty) Ltd which had been registered in May 2013 and jointly owned by the LNDC, Montara and the Lesotho Defence Force.

Businessman, Teboho Kobeli, also invested in the project as Montara’s local partner.
The LNDC then put in M7 million to refurbish the cannery whose machines had been rotting for several years due to neglect.
This is in addition to the thousands more maloti the corporation spent on staff, including those Obtala had seconded to the cannery in Masianokeng.
LNDC’s head of investment promotions Mokhethi Shelile, whose office was in charge of the project, said he could not readily tell how much the corporation has lost because he needed time “to reconcile the figures”.

He however admitted that it was only the LNDC that was paying “everything” when the cannery opened and Obtala “never fulfilled its promises”.
Shelile said the role of the LDF was to provide its warehousing facilities around the country to make it easy to collect agricultural produce from farmers.

“I can say the project collapsed even before it kick-started because Obtala did not meet its obligations,” Shelile said.
“The money that they pledged to invest never came and the LNDC was the only one paying everything”.

“Even the canning expertise, in fact, the entire technical expertise which we relied on for the project to succeed was not there.”
He said they wanted to sell canned tomatoes for the European market which requires high quality standards.

For the cannery to export to Europe, the packaging, hygiene and other related necessities would be assessed by a company from Europe.
Shelile said the cannery failed the test because “Obtala lacked the expertise it said it had”.

“As for us, we just have the facility but we cannot run it because we do not have the necessary expertise hence Obtala was roped in.”
Shelile said the tins in which tomatoes were canned burst “and we suffered a great loss”.
“Surely, the project was bound to collapse under the circumstances,” he said.
Shelile said the LNDC had to cut ties with Obtala “and now we are looking for any company, whether local or foreign, that has the required expertise and enough funds to run this project”.

Another reason the project failed was that local farmers did not have enough information on the kind of tomato they should produce, which would be suitable for the European market.
Shelile said the cannery had to import tomatoes from South Africa “while at the same time we tried to give Basotho farmers information on the suitable tomatoes”.
He said without the local supply, the cannery found it difficult to sustain its business.

To sell to Europe the cannery was supposed to have a track record of six months of consistent export to the same market.
“As you will agree, this was very difficult for the cannery because we could not export without certification and there was no way we could have that track record,” Shelile said.
He however agreed that they made a mistake of skipping the local and regional markets that would not require that much from them.

However, Kobeli, said the project collapsed because the LNDC did not meet its obligations and Obtala decided to withhold its funds.
Kobeli, who said he would not reveal how much he had invested, said when Obtala came to see the progress on things it expected from the LNDC “they found that nothing was in place for them to start the business”.

“I have lost like any other businessman who expects to lose or succeed when investing his money in a business,” Kobeli said.
“Investing in any kind of business is a win or lose situation. I invested knowing very well that (I could have) a profit or a loss”.
“I believe there’s no one who is really to be blamed for the collapse of the cannery.”
The cannery has the capacity to produce 500 litres of canned fruit daily.

It was started in the 1970s as a means to create a market for agricultural products for both domestic consumption and export to Europe.
At that time the cannery exported asparagus to Europe while it canned and packaged other fruits and vegetables for local consumption.
Towards the end of the 1980s the cannery was mismanaged and in the early 1990s it was closed down.

In early 2000s the then Trade Minister Mpho Malie started canning peaches and making fruit juices but that too collapsed.
The 2013 attempt under the then LNDC chief executive, Joshua Setipa, who is now Trade Minister, was meant to create the market for local horticulture promotion.
Under this arrangement, the LDF would be responsible for production of asparagus, beans and other crops for the cannery.
The LNDC would provide farming land, funds, agricultural inputs such as seeds and fertilizers and machinery.
The army would also provide manpower.

The collapse of the cannery has not gone down well with small businesses.
Thabo Qhesi, the Private Sector Foundation of Lesotho’s chief executive, said it was sad that this project has not benefitted local farmers despite that a lot of money was invested in it.
Qhesi said many Basotho farmers who own fields near the cannery with an intention of supplying the cannery with their produce should have been the first to benefit.

He said members of the foundation “had high hopes that the cannery was going to buy their tomatoes and they were ready to be engaged but the project disappointed them”.
Qhesi said farmers waited for the project officers to give them information on the required kind of tomato but they were never supplied with such information.
Shelile agreed that the local farmers were not given sufficient information.

Shelile said the LNDC is back to the drawing board to map out how to move the cannery forward “hence we are inviting anybody with the capacity to run it to come forward and say so”.

Matšeliso Sehloho

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