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Storm over ‘stinky’ meat shares



….Ministry touts public to buy shares in dodgy company…..

MASERU – THE Ministry of Small Business could find itself in a legal fix after touting the public to buy shares in a private company whose details are opaque.
On April 4, the ministry crowed on a Facebook page about what it thought was a lucrative investment opportunity in a company called Basotho Meat Enterprise.
It said the company, incorporated in November last year, was looking for an M8 million-investment in exchange for a 30 percent stake.

The company was offering 10 percent to the Association of Butcheries.
And as if to sweeten the deal, the ministry said the association will pay for the shares from dividends earned in the new company. The other 20 percent is offered to the “general indigenous Basotho public” for M80 000 a share.
“If that is not development, then we don’t know (sic),” the ministry declared after inviting those interested to register with the principal secretary and director of small business.
Leading the company is Mosito Khethisa, the former PS of the Ministry of Finance who is now chief executive of Meraka Lesotho.
Meraka Lesotho is the country’s only licensed abattoir that the government also controversially granted a monopoly to import beef.

Basotho Meat Enterprise seems intricately linked to Meraka Lesotho because of the nature of its business, leadership and shareholding. Its core business will be the manufacturing of sausages, viennas and cold meats.
Apart from leading Meraka Lesotho, Khethisa also owns 400 shares in Basotho Meat Enterprise. Xiaoyi Yao, a Chinese woman who has 690 shares in Meraka Lesotho, owns 250 shares in Basotho Meat Enterprise. A certain Stefan Engelbrecht owns 350 shares.
On the surface, it looks like the ministry is advertising a golden business opportunity to the public.
At this point, the ethical concerns about a government ministry advertising shares of a private company might not be too noxious.
After all it is the ministry’s mandate to promote small businesses.

But a closer look reveals a transaction that could be gravely faulty both legally and mathematically. The Basotho Meat Enterprise doesn’t seem to meet the regulatory prerequisites to offer shares to the public.
Worse, the mathematics behind the share offer looks so defective that some experts suspect it borders on fraud.
First, the legal issues. According to the Companies Act 2011 the Basotho Meat Enterprise is not allowed to offer shares to the public because it is a private company.
The law “prohibits any invitation to the public to subscribe for any shares or debentures of the (private) company”. A private company, the law says, should not have more than 50 shareholders.

To offer shares to the public, Basotho Meat Enterprise should change its registration status from a private to public company. The company, doesn’t seem to have done that, according to the registration documents.
Yet even if it were to transform into a public company the process of offering shares to the public doesn’t seem to be as easy as the Ministry of Small Businesses makes it out to be.
Section 115 of the Companies Act says a public company’s public share offer should be accompanied by a detailed prospectus. It says a company should advertise in a “newspaper or elsewhere” clearly indicating where the prospectus can be found.

Basotho Meat Enterprise doesn’t seem to have a prospectus nor is there any indication that it has advertised the shares in its own capacity. What the public has so far is a post the ministry made on a Facebook page that has a disclaimer that it is not official.
“The Page is NOT an Official Page, but it is managed from within the Ministry as a Pilot Page to Test The Usefulness of…” the ministry says on the page.
A prospectus is the most important document when a company is going through an Initial Public Offering because it reveals the number of shares, the prices, the financial status, management structure, nature of business and company profile.
Most importantly, it shows the value of the company and explains how the share valuation is reached.

The prospectus will also reveal the due diligence analysis by accountants and auditors. The names of the accountants, auditors, attorneys and bankers of the company are supposed to be in the prospectus.
Those experts have to give their consent to have their names being mentioned in the prospectus because it is their credibility at stake if things go wrong.
The idea is to protect the public from being fleeced by fly-by-night companies. Without a prospectus there is a huge risk that the public might buy shares in shell companies that have no assets or sustainable business model. Nothing stops unscrupulous people from selling shares in a dubious company and making away with the loot.
So far there is no prospectus showing Basotho Meat Enterprise’s shareholding structure, financial status, management and share valuation. No one knows if it has started operating because there is no prospectus showing its official address.

Ideally, a prospectus is supposed to explain why the company is looking for additional capital and how it will use it.
Incorporated in November last year, the company doesn’t seem to have sold even a single product. Its production, turnover and profit projections are still unknown yet it is calling on the public to invest M8 million. To make matters worse, no one knows who will be leading the company and what assets it has.
This is in addition to the fact that as a private company, it has no right to sell shares to the public.
But it is the defective mathematics involved in the share valuation of Basotho Meat Enterprise that should spook potential investors and force the Small Business Ministry to rethink its association with the company.
Records show that the company’s share capital is one million shares. Now remember that it is selling each share for M80 000. To get the size of the company you multiply the number of shares by the share price. So according to its share capital and share price Basotho Meat Enterprise is worth a staggering M80 billion.

To put it into perspective, Lesotho’s Gross Domestic Product (GDP) is about M40 billion and its budget is about M16 billion. GDP is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It is a broad measurement of a nation’s overall economic activity.
In this case, the owners of Basotho Meat Enterprise are saying a company started in November last year is two times bigger than the value of finished goods and services Lesotho produced last year.
In other words, a company that is barely six months old and has not sold a single product is two times bigger than the total wealth of the whole country. The bizarre mathematics doesn’t end there because according to this valuation, the company is five times bigger than the budget of Lesotho. Yet this supposedly M80 billion company is looking for a mere M8 million on the open market.

The story gets murkier as you interrogate the numbers. In an interview with thepost Khethisa sounded unsure about the numbers. He said the share capital of one million was a mistake made by the Ministry of Trade when the company was registered.
“I don’t know why it was not rectified,” Khethisa said.
But the Ministry of Trade doesn’t amend registration forms because it solely relies on details provided by those registering the company. If this is a mistake, then it most probably came from the company’s directors.
Khethisa said the three shareholders made an initial investment of M8 million to start the company.
That money was used to rent premises and buy equipment, he said.

But the numbers tell an entirely different story. Khethisa and his three partners own 1 ooo shares of Basotho Meat Enterprise. If each share is worth M80 000 it means Khethisa and his partners did not invest M8 million as he says.
Khethisa however insists that they invested M8 million. If we assume that the correct figure is M8 million it boggles the mind how they arrived at the M80 000 as the price for each share.
The trio owns a total 1 000 shares in the company. If their 1 000 shares are worth M8 million it means each share they hold is worth M8 000 (eight thousand Maloti). To get the value of each share you divide their investment by the number of shares they hold.
The question then is: at what point did a share that initial investors bought for M8 000 jump to M80 000 in just six months?

The company has not even started selling products but its share price has gone up ten times.
This is a company whose financial status is largely unknown.
No one knows what’s in its bank accounts and how much are its assets, if there are any.
To raise M8 million, the company only has to sell 100 shares to the public. So Khethisa and his partners bought 1000 shares for M8 million but they are asking the public to shell out M8 million for just 100 shares.
Still that is not the most curious part of this share offer. Remember the company has a share capital of one million shares. With only 1 000 shares of the share capital of one million, it means Khethisa and his partners own 0.1 percent of the company.

Using the same logic, the public’s 100 shares will amount to a miserly 0.01 percent of the company.
Khethisa doesn’t see it that way. He said the public will own 30 percent of the company even if they are buying 100 shares in a company that has one million shares. He told thepost that the motive of the share offer is to “distribute wealth to Basotho”.
It is however unclear how it’s possible to distribute wealth by selling a share for M80 000.
By some estimates, the average net salary in Lesotho is M76 000 per year, slightly more that the price of one share in Basotho Meat Enterprise.

Khethisa said the Ministry of Small Business also had reservations about the share price. “They said perhaps we could have made it M2 000 per share but we could not change because we had already registered,” he said.
“We were looking at business people when we offered the share. We were not considering the very poor,” he added.
Chalane Phori, the Minister of Small Business, said the ministry’s only role was to alert the public to an investment opportunity.
He said the ministry was trying to do what the Lesotho National Development Corporation (LNDC) has failed to do.
He didn’t seem bothered by the legal issues involved in the transaction.
“The role that we play as the Ministry of Small Business is to enhance the development of small businesses,’’ Phori said.

Basotho Meat Enterprise’s shares seem extremely overpriced even if we assume everything else about the transaction is in order.
The shares of Apple, which has a market capitalization of US$1 trillion (M15 trillion) were hovering at US$200 (M3 000) this week.
Amazon’s stock is trading at around US$2 000 at a time when the company has a market capitalization of US$1 trillion (M15 trillion).
Yet Basotho Meat Enterprise, a company that has not sold a single sausage and claims to be worth M8 million is selling each share for M80 000 (US$5333).

Advocate Letuka Molati told thepost that he was shocked by the proposed transaction.
“It is wrong at all for a private company to offer shares to the public. Even with the little information we have, it is clear that there is something wrong about the proposal,” Advocate Molati said.
He was stinging in his Facebook post about the proposal, describing it as “one big joke that makes us a laughingstock of other nations” and “another lowly thought of monopolistic tendencies and practices meant to sugarcoat corrupt and backward business practices that swim against the tide of a free market economy”

Shakeman Mugari & Refiloe Mpobole


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Lesotho’s own brandy



ROMA-“Go, eat your food with rejoicing, and drink your wine with a cheerful heart, for already the true God has found pleasure in your works,” so says the Big Book.

Driven by that divine, Mohapi Pule has gone a step further – by coming up with a new type of brandy – to make you merry.
The brandy, Mountain Spels Brandy, will make the heart of the dying man rejoice.
“The healthy nutrients in fruits that make brandy, end up in you when you drink it,” he said.

Pule studied nutrition at the National University of Lesotho.
His brandy is made by fermenting fruits into wine. The wine is then distilled into a brandy. It carries the flavour and the aroma of the original fruits.

The story began when Pule was born in Quthing, Mphaki. He was born to a hardworking mother who brew traditional beer like no other.
“She brew beer well before I was born. She is still making it to this day,” he said.

His passion for brewing was probably “born” even before he was born. Mothers have a hidden way of passing not just their looks but their passions to their children.

As he grew up, he found that he was still intertwined with his mom’s brewing business in one way or another.
“Mostly, I am expected to fetch water for the brewing process. That, I still do to this day when I visit home,” he says.
Two decades later, Pule found himself in the Roma Valley, doing BSc in Nutrition.

“At some point, I found that I had lost purpose in life. There was not a thing that I could say, well, I was passionate about this thing or that thing.”
That situation, of course, threw him into some serious soul-searching.
It brought him back to his roots.

“During this period, I recalled that when I was younger, I used to imagine helping my mom do the packaging of the beer she was making and helping distribute it countrywide,” he said.

From a young age, the issue of subsistence business didn’t appeal to him. But that imagination came and passed. Now here he was, worried that he might not amount to anything in life.

Then, boom! An idea came!
What if he produced an alcoholic drink?

He could have thought about anything to do as a business but, lo and behold! He thought about his mother’s passion!

One of the things he loves about alcoholic beverages is that they are popular.

“I haven’t seen products as popular as alcoholic drinks,” he said.
He might be wrong or right but the reality is, the rest of the world has for generations found delight in alcoholic beverages – some to the extent of overdoing it to their injury!

“Mabele khunoana ralitlhaku thabisa lihoho. Mabele u tsoa kae e le khale re u batla re sa u thole? Ueeeena mabeeeele!” (Loosely translated beer brewed from sorghum make men happy. We’ve been looking for you from afar, you sorghum. In short, this is a praise poem for the Sesotho sorghum brew).
But then came the most difficult part. Which specific beverages should he focus on and how would he do it?

He decided that he would focus on ciders. He realised that not many people in Lesotho were making ciders.

He started experimenting at home and realized how difficult the process was. He just couldn’t get it right. To worsen matters, he also did not have the right equipment.

But like most successful innovators, he just knew that he had to start his business right away.

Pule says he then learnt about other forms of beverages: the spirits. Spirits are very high in alcohol content. Here we are talking the likes of whiskey, vodka and brandy.

He was particularly interested in vodka. He went into one NUL laboratory and, with necessary permission, began testing a number of spirits and doing a lot of research about them.

He began saving some of the money he earned from the National Manpower Development Secretariat in the form of student allowance so he could buy equipment. Saving was not easy. The subsistence money was already not that much. Having to share it with a business was asking a little too much.

But Pule was so determined that he did it, bought equipment that allowed him to develop what he thought was “vodka”.

However, after buying the equipment he immediately realised that the equipment was to make brandy not vodka.

“Now I was forced to get into brandy by chance,” he said.
It was a mistake that he has never regretted having realised that there are very few individuals who were making brandy in Lesotho.

Pule had to throw himself fully into experiments. He read books about brandy production. He even enrolled for an online course on distillation.
In the end, he began to see some light.

“I began to feel some difference in the taste of my produce,” he said. “When I shared my produce with my lecturers, they were over the moon!”
With that encouragement, Pule began packaging his brandy and is now selling it to family and friends.

“My small equipment means that I can’t produce much. However, If I were to get bigger equipment, things would be much better.”

Own Correspondent

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Ready-to-cook vegetables



ROMA – ’MATUMANE Matela, a National University of Lesotho (NUL)-trained nutritionist, is an example of how a nutritionist should think and act.
Matela makes and sells ready-to-cook vegetables out of produce from her own farm or produce she preferably buys from local farms.
“When I make a dish, as a nutritionist, I make choices that ensure a typical package is packed with nutrition,” Matela said.

Today, we examine an interesting story of the lady who is determined to ensure that you eat healthy despite your busy schedule.
It started with her experiences in life.
She describes herself as an extremely busy woman.
She likes getting things done.
As the busy amongst us will say, the busier you become, the less you watch your diet.
She couldn’t escape the trap!

“My busy schedule meant that I ended up eating junk and I was gaining weight,” she said.
With time, she came to her senses.
As a nutritionist, she recalled that the best way to preach was to preach by example.
So, was she preaching what she practised?
Clearly, she wasn’t.
She had to find an option to maintain the busy schedule and eat healthy at the same time.

The beautiful thing about nutrition is that the healthiest foods are the closest to us: fruits and vegetables.
Some scientists even claim that our bodies seem to be designed to thrive on fruits and vegetables.
“Have you ever wondered why looking at a ripe raw peach on a tree is mouth-watering but looking at a fat cow isn’t?” asked one scientist.
Well, whether we were designed for fruits and vegetables or not, the truth is that they are good for our bodies.
That’s what good science tells us.

And we somehow “know it” too if you have heard about anything called intuition.
So one day she found herself increasingly eating fruits and vegetables.
It’s easier to change a religion than a diet, they say.
So it is commendable that she changed her diet at all.
“The idea was to chop as much vegetables as possible and put them in a fridge so that in future, I will just pull them out and cook.”
She wasn’t proposing something new.
Who amongst us doesn’t enjoy the convenience of just pulling up chopped frozen vegetables and cooking?

Little did she know that what she was doing was putting her on a path to a brilliant business.
It took a post on a social media to achieve just that.
“I took a pic of the chopped and packaged vegetables and posted them on my social media account. The reaction was swift. I began getting questions like, “how much?””
It immediately dawned on her that she could be sitting on a great business idea, after all.

So she gave it a try and started selling.
To her surprise, people started buying.
In fact, “I get orders for my products almost on a daily basis.”
That is how interested people really are.
This to an extent that her business now gets up to four irregular employees, she included, when the demand is high.
She said her training in Agriculture, Home Economics and Nutrition has helped her to give a thought into what she was doing.

For instance, where possible, she grows her own crops and sells them as first preference.
She has grown spinach, butternut, green pepper, onion, herbs and beans.
She is also in the process of renting more fields to grow more vegetables.
Then she empowers Basotho producers by requesting them to supply.
Going for foreign produce is the last resort.
Look at her packages and you realise something.
The “7 colours” proverb comes alive.

Those seven colours (several colours actually) may have been designed to appeal to your eyes but that is just the tip of the iceberg.
The colours of vegetables mean a lot in terms of nutrition.
Each colour gives you something different.
So, the more colours in one meal, the merrier.
To drive this home, let’s go a scientific route for a second.
Red, Blue and Purple: These vegetables contain substances that are good at reducing the risk of stroke, cancer and memory problems.
White: The likes of onion or garlic may help lower your risk of high blood pressure, high cholesterol, cancer and heart disease.

Orange and Yellow: Carrots immediately come to mind.
These vegetables contain substances called carotenoids which may help improve your immune system and help to improve the health of your eyes.
Basotho, it would appear, have long known a thing or two about the relationship between carrots and eyes.
Hence the famous saying, “o jele lihoete” (they ate carrots), often applied to good sportsmen or women with symbolically “good eyesight”.

Green: Green is life. Green vegetables come packed with chlorophyll, a chemical that scientists believe can boost your immune system, eliminate fungus in your body, clean your blood, lead to healthy intestines and give you boundless energy.
As a bonus, her Home Economics background is such that she is armed with a host of recipes for each of the packages she sells.
She has great dreams for the future.
“I want to see my products decorating the shelves of big supermarkets,” she said.
It’s time!

Own Correspondent

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A new, co-operative chain store



ROMA – ’MAKUENA Lesiea is spearheading the creation of a cooperative chain store that will sell Lesotho products only.
The store is being developed under the National University of Lesotho (NUL) Innovation Hub and it will be incubated by the Hub.
“Have you seen it? Basotho are producing like never before,” Lesiea said.
“However, their products are hard to see in the markets. We want to change all that.”

The store, she said, will open branches in all districts of Lesotho, starting from Maseru.
Visit any supermarket in Lesotho and check the products on the shelves.
You will be shocked to realise that, in general, just one percent of them are made in Lesotho.
The other 99 percent comes from elsewhere.
Is it because Basotho are not producing or can’t produce at all?

“Having worked directly with the NUL Innovation Hub and the Tsa Mahlale TV programme under the Hub, I have travelled the depth and breadth of Lesotho and I was amazed at the amount of work Basotho are doing,” she said.
What is the problem?
Basotho products are not given sufficient platforms to prove themselves.
“Credit where it is due, some shops are beginning to accept and sell Basotho products,” she said.

“However, they are barely making a dent because Basotho products, being at their infancy, cannot receive full attention unless by a store that is designed to give them full attention.”
Such a store doesn’t exist.

She said the idea is not to compete with any of the existing stores because “we are getting into a new territory altogether, we are addressing a different market”.
So listen to Lesiea as she presents some features of the store that will surely persuade you to join the bandwagon:

  1. Customer and producer confidence: The store, she said, will achieve two things.
    First, when they see masses of Lesotho-made products in one place, Basotho customers will slowly grow confidence in them.
    The confidence will shoot to the roof when the customers experience that many of the products made in Lesotho are already way ahead of foreign competitors in terms of quality.
    Secondly, the store will give Basotho producers an assurance that their products have, at least, one store that is willing to take them, dark or blue.
    More production will come from such assurance.
  2. Selling “everything”: The store will sell everything from fruits and vegetables to processed foodstuffs to clothing and building materials (if Thabure car will be in production by then, it will be on the shelves too).
    “Suppose what we want to sell is not locally made, we will never cross the border, any border, to find its equivalence. We will encourage Basotho to produce it until they do.”
  3. We mean business: whereas Basotho are beginning to produce, their products are still all over the place.
    You bump across them in some few willing stores, in expos and trade shows, or as being sold by individual resellers. Those are good efforts, but they are not enough. In fact, many in Lesotho have come to see producing and selling as being more of an art, a hobby, a therapy or a hustling than a business, “so we are seriously moving away from such a casual approach, we mean business this time around.”
  4. Ownership: So when you enter this store, you could be purchasing a product made by you in a store owned by you. What a difference!
  5. Reasonable standards: the store will only demand reasonable standards. As a struggling Mosotho, try taking your products to some of the local shops and you are, at worst, turned away without reason or, at best, given a long list of standards you must meet before they can take your product.
    “In our case, as long as your products are reasonably of good quality, you are in. NUL Innovation Hub is already testing many Basotho products. We won’t ignore quality, but we won’t use it as a way to prevent Basotho products from growing either.”
  6. A cooperative chainstore: From contributing as little as M50 per month, members will use a continuous financing model to ensure that the store doesn’t just end in Maseru but reaches the ten districts of Lesotho.
    Each branch will start at a medium scale in order to grow along with Basotho products. We won’t ask for investors to come from anywhere, “we will be investors ourselves.”
  7. An export launch pad. “We are often told to export our produce. The obvious question is, if you haven’t convinced your own people to consume your own products, how can you convince people in other lands to do so? Why should they take you seriously?”
    However, the store is not meant to be a local store forever.
    It will be a means by which we export our products to other countries in the future.
    When we export the store to Soweto, we export it along with products from Lesotho.
    Don’t say no because we have seen Chinese shops and Indian shops and, of course, South African shops, filled to the brim with Chinese products and Indian products and South African products in many countries.
    “If they can do it,” Lesiea ended, “so can we.”
    “Because if it is there in some of us, it is there in all of us.”

Own Correspondent

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