Bwin exits Zambian market after ‘$5 million investment’

An Austrian online betting brand acquired by Entain Plc has made headways in exiting the Zambian market claiming that there is a change of strategy at the group level and the focus is now shifted to a high-growth market.

Bwin the global sports betting platform was launched in Zambia in late 2022 November after seeing the booming market from the Zambian players of online betting.

Unconfirmed reports indicate that Zambia was only used by the company as a stepping stone to higher heights noting that the company has made huge profits during its 2-year time of operations in Zambia.

Speaking in an exclusive interview with the Zambian Business Times Times –ZBT, Bwin country marketing Manager Golden Ngandu, however, denied that the Company was leaving because of some irregularities which may include tax invasion and over-making a profit at the expense of the poor Zambians.

Ngandu confirmed that indeed the company has made significant progress in exiting the Zambian market as they have already given notice to the relevant regulatory boards and authorities.

He said, “As you may be aware, Bwin is part of the publicly listed company Entain plc which is our group, so now from Entain there has been a change in strategy where they have literally just pulled out of what they consider to be smaller markets and focus on high growth markets like brazil, north America so those are the areas that are being targeted now and that’s where the focus is going now.”

“So three countries are affected because that’s where the licensing was at the advanced stage we were actually making our inroads into South Africa and Kenya and Zambia as the only African Country where we were fully operational.”

Asked about the initial amount Bwin has invested in the Zambian market and what profit was realized from the investment, Ngandu said, “Over $5 million dollars had been invested in the Zambian market because we have been operating for over 2 years now.”

“Even the European there are markets where Entain has exited so it’s not necessarily out of profitability because you know as a business you give yourself targets and month on month for Bwin Zambia we were overachieving in terms of those targets but when it comes to the volume of growth, I think it’s the new strategy that the group came up with so, of course, they were some contributions in revenue but they were not up to the point that was meeting the new strategic objectives.”

Ngandu could however not mention how much profit had been realized from the over $5 million invested in the Zambian market. “what we can do is maybe allow me to get hold of the figures because I don’t want to speak to certain figures due to the different aspects of the business that we are handling. But I’ll request that your cue in a formal request to show the actual performance.”

An Austrian online betting brand acquired by Entain Plc has

SERIOES Property sold at an undervalued price by ‘K1.3m’ to Nyimba Investments Limited

The sale of Luanshya’s SERIOES International Company Limited properties, a company that was once a producer of suits for the local and international markets before the privatization era, has been rounded off by alleged corrupt deals.

Questions have risen on the alleged corrupt sale of the SERIOES International Limited Property Stand No. 1554 in Luanshya by the Office of the Administrator General and Official Receiver to Nyimba Investments Limited after it was revealed that the property was sold at a price that was lower than the reserve price by about K1.3 million .

The sale, which was finalized in May 2021, saw Nyimba Investments Limited acquire the property for K1,650,000, despite a higher offer of K2,951,000 being made by Antelope Wholesale Merchants Limited in June 2020.

According to the audit findings on the accounts of parastatal bodies and other statutory institutions for the financial year ended 31st December 2022, On 10th February 2020 Nyimba Investment Limited as seating tenants was offered to purchase property at stand No. 1554 situated in Luanshya at a reserve price of K2, 935,000.

However, the company (Nyimba Investments) responded with a counteroffer of K1,560,000 resulting in the Office of the Administrator General and Official Receiver placing an advert in the print media in May 2020 for the sale of the property at a reserve price of K2,935,000.

In this regard, on 3rd June 2020 Antelope Wholesale Merchants Limited made an offer of K2,951,000 for the property. However, it was observed that the property was finally sold to Nyimba Investment Limited in May 2021 at a price of K1,650,000 which was lower than the price offered by Antelope Wholesale Merchants Limited by K1, 301, 000.

The sale of property at a price lower than the reserve price is highly irregular and raises serious questions about the motives behind the sale.

With experts questioning the transparency and fairness of the sale process, it has also emerged that management did not provide a copy of the valuation report of the property sold, further fueling suspicions of foul play.

Reports indicate that Luanshya’s SERIOES International Company Limited was a Luanshya-based company that produced suits for the local and international markets. Suits made by SERIOES made it to the competitive European market and other international markets. It also produced various garments for the military and also exported to most of southern Africa.

SERIOES International Company Limited was also the maker of posh suits for government dignitaries such as ministers and presidents before It was sold off during the privatization era.

More details to follow…

The sale of Luanshya’s SERIOES International Company

IPP takes half a billion dollars knock after ZESCO debt write-off

Itezhi Tezhi Power Corporation – ITPC, an Independent Power Producer – IPP is on the verge of suffering serious financial losses after the power-generating corporation agreed to write off about half a billion United States dollars’ receivables from ZESCO after a protracted period of dispute, negotiation, and final arbitration.

Itezhi Tezhi Power Corporation – ITPC is a 120MW hydropower project located in the Kafue river basin in Southern, Zambia and currently supplying power to ZESCO.

ITPC’s debt with ZESCO had been allowed to accumulate to over $780 million from 2016 to 2022 due to the reluctance and dispute by the state-owned power utility Company –  ZESCO to settle the bill.

According to the statement issued by ZESCO Managing Director Victor Mapani, ITPC has since agreed to write off the receivables of close to half a billion US dollars ($453 million dollars) a situation which has raised suspicion that Tata Power Company (the co-shareholder) may have deliberately and corruptly tried to over bill the public utility ZESCO as there has been no justification as to how this huge debt was allowed to continue to grow over a period of about 7 years.

This means that the amount of debt owed by ZESCO to ITPC has been slashed down from $784 million to now only $179 million after the writing off of the whooping $453 million as well as an additional payment of about $152 million by ZESCO to ITPC in the last two years.

Speaking in an exclusive interview with the Zambian Business Times – ZBT, ITPC Chief Executive Officer – CEO Moses Mbuta, however, highlighted that the reduction in the amount in question is a result of the revised tariff which was backdated to the time when they started supplying power to ZESCO.

He confirmed that there has indeed been a reduction in the debt owed by ZESCO admitting that there were some mathematical and business financial modeling errors that could have resulted in the miscalculation of tariffs and subsequently the total debt accrued by ZESCO.

“Yes there is that reduction and it can be attributed to two things, the first is that the tariffs were renegotiated between ZESCO and ITPC as the independent power producer, so the tariff was reduced and that reduction was back-dated to the commencement of operation date – COD which was in 2016.”

“So that entails that just by that reduction in tariff, [overall] debt was reduced and ZESCO has been servicing and has made some payments to that debt so that also caused the reduction.”

“That difference [of $453m] is because the reduction in tariff was back-dated from the time that we started selling power to ZESCO so that difference between the earlier tariff and the revised tariff is what gives you approximately that amount. The other term is to write it off but in our case, we say re-stating the account so we went back in time to 2016 and started re-invoicing using the revised tariff so that was automatic by virtual of that.” Remarked Mbuta.

When put to him that there are allegations that Tata Power and ITPC may have attempted to defraud ZESCO and Zambians since it’s a public utility?  Mbuta could not confirm if ITPC was using tricks to overcharge the power utility Company – ZESCO a situation which could have led to the loss of over $453 million in debt from ZESCO which ITPC has now let go.

ITPC is 50% owned by Tata Africa and 50% by ZESCO. The company has a 25-year concession and off-take agreement with ZESCO. More details to follow…

Itezhi Tezhi Power Corporation - ITPC, an

NATSAVE records a negative variance of over K231 million

The National Savings and Credit Bank –NATSAVE- recorded a negative variance of K231,644,774 for the financial years ended 31^st December 2020, 2021, and 2022.  

According to the Auditor General’s Report, the Bank recorded losses of K213, 131,000 in 2020, K81,679,122 in 2021, and K91, 263,164 in 2022. It was further observed that according to the NATSAVE strategic plan and budgets for the period under review, the bank had Return on Equity targets of 15%, 10%, and 19% for 2020, 2021, and 2022 respectively, but recorded negative Return on Equity of 421% in 2020, 298% in 2021 and 85% in 2022 indicating poor profitability of the Bank. “Return on Equity Return on equity (ROE) expresses profit after taxation (PAT) as a percentage of equity. It measures how much profit an entity generates for the benefit of its shareholders’’.

The Auditor General’s report further indicated that according to the NATSAVE strategic plan for the period under review the bank had Net Interest Margin targets of 25%, 13%, and 56% for 2020, 2021, and 2022 respectively. Although the Bank recorded positive net interest margins of 16% and 25% in 2021 and 2022 respectively, the margin recorded in 2022 was below the set target of 56%. “Net interest margin is a measurement comparing the net income a financial entity generates from its credit products such as loans and mortgages. It is calculated by comparing the net interest income against average earning assets”.

The bank further had a Gross Margin ratio target of 32%, 71%, and 63% for 2020, 2021 and 2022 respectively. It was however noted that the bank recorded a gross margin ratio of 33% above the set target of 32% in 2020, but unfortunately recorded Gross Margin ratios of 53% in 2021 and 58% in 2022 which were below the set targets.

With regards to Return on Assets, the bank had Return on Assets targets of -12%, 1%, and 0.3% for 2020, 2021, and 2022 respectively. “A review of the financial statements for the period under review revealed that the Return on Assets was negative in all the three years”. It was noted that the bank recorded a negative Return on Assets of 11 in 2020, 4 in 2021, and 4 in 2022. This was attributed to the losses the bank recorded in all three (3) years under review.

During the period under review, the regulatory capital of NATSAVE was negative K146,637,146 representing a deficiency of K239,085,961 below the required minimum regulatory Capital of K92,448,815 being 10% of risk–weighted assets of (K925.7 million).

The bank further recorded Regulatory Capital Adequacy ratios of 2% in 2020, negative 9% in 2021, and negative 16% in 2022 which were below the minimum 10% prescribed by Bank of Zambia. “The Capital adequacy Ratio indicates whether the Bank is stable in its meeting time liabilities and other risks such as credit, liquidity, and operations. Furthermore, it implies that depositors’ funds are protected and the bank is not at risk of insolvency”. The recommended rate by the Bank of Zambia is above 10%.

Furthermore, the Bank had equity of K50,625,514 in 2020 which was reduced to negative K27,381,782 and K107,557,184 in 2021 and 2022 respectively.

The report further indicated that a review of the suspense unclaimed fund schedule revealed that amounts totalling K1,060,040 which remained unclaimed as far back as 2009 had not been relinquished to the Bank of Zambia contrary to the Provision. It was noted in the report that “Section 160 (3) of the Banking and Financial Services Act No. 7 of 2017 stipulates that a financial service provider holding funds or personal property presumed abandoned under this section should report to Bank of Zambia on the amount and nature of such funds or property, in such form and at such time as may be prescribed by the Bank, and shall pay such funds or relinquish the property to the Bank upon expiration of a period of ten (10) years”.

In addition, a review of the 4th May 2021 Executive Committee minutes showed that NATSAVE engaged One World to pilot the bank-wide courier services including the distribution of 3000 Europay MasterCard and Visa cards. The report revealed that as of 31st December 2022, amounts totaling K374,194 had been paid to the service provider. It was however observed that none of the procurement procedures provided for under Section 37 of the Zambia Procurement Act No. 8 of 2020 were followed.

The National Savings and Credit Bank –NATSAVE-

PROPERTY DEVELOPMENT: GRIT AND GLORY

By Nkondo Mudenda MRICS, PrQs, PMAQS, CAIB(SA)

“……. When schemes are laid in advance it is surprising how often the circumstances fit in with them.”

Property development will be critical in the Zambian property market with the expected economic growth. In its 2020 Infrastructure Report, the World Bank highlights the critical role of infrastructure in supporting economic growth and poverty reduction. The report states that “strong economic growth is often accompanied by increased investment in infrastructure, as governments and private sector actors seek to meet the growing demand for goods and services.”. Property investment will rely heavily on property development for sourcing investment opportunities.

Securing project financing and attracting the right investors for the potential projects in this challenging development environment, demands familiarity with the process by which projects are analysed, financed, developed, marketed, managed, and indeed regulated. This article will discuss and assess the property development process.

Property development is essentially an integrated process revolving around a team concept that links the owner of the initial opportunity, the developer, the financier, and the end investor with the public and tenants they serve. Development projects often involve intricate planning, permitting, financing, construction, and marketing phases. Navigating these complexities without professional guidance can be overwhelming and lead to costly mistakes.

The property development process founds itself on the principle that all successful projects:

• Are compatible and complementary with the natural resources of their sites and with the surrounding land use. This simply means legal permissibility in terms of zoning regulations, building permits, and environmental permits.
• Are Physically Suitable for the sites with all the required amenities. It is crucial for site comprehensive assessments and ensuring the safe and successful development of the projects. These assessments include Geotechnical Survey, Traffic Impact Assessment, and Topographical Survey.
• Have typically met or exceeded the development objectives of their investors and owners. This includes financial gains and the quality of products and services desired by the tenants. This underscores the key point that, the projects are Financially Feasible.

The property requires reciprocity between the members of the development team, as well as the public and private sectors in which they operate characteristics of the market segments that will ultimately decide the feasibility of the process.

The process of developing an investment property, regardless of type, size, or location, requires setting in motion and accomplishing five distinct phases of activities:

1. Initiation and Conceptualisation
2. Project Feasibility synopsis together with an in-depth analysis
3. Commitment (Financial Close)
4. Design Development, and Construction
5. Management and Operation

In all the above there are inter-relationships between each of the phases and indeed the first three phases often repeat before moving onto the final two phases of the cycle. In some cases, too little effort goes into the conceptual planning and feasibility phases. Budgets are restricted, timing is short and often constraining and the perceived need to get started overrides determining in a careful, comprehensive manner of what needs to be done. What results is a product that fails to meet the expectations of its investors, performs poorly, is over-built or under-built for the market, and may threaten the financial credibility of its owners. Examples exist throughout the world of projects that pay insufficient attention to the construction and management/operation phases.

The Developer and Investor must therefore thoroughly understand the development process, know when and from whom to seek professional advice, and be able to integrate the skills of each member of the development team (Construction Project Manager, Architect, Quantity Surveyor, Engineers, Property Brokers, etc) effectively to produce a successful project. The need to engage the pertinent professionals at this early stage in the review process is vital, as the quality of the input directly reflects upon the project at completion. It is also important to understand and recognize that with development at the earliest concept stage, it is “function before form” being determined. The product is designed to allow the operation of a business or function to be performed within the space, not the space being designed, and then discussions are held about how one should fit into it.

Property development, although constrained by uncertainty regarding future conditions, governed by ever-shifting market segments, and subject to the increasingly higher expectations of all those involved, nevertheless frequently offers a challenging and exciting prospect. In developing a property, the Developer, and Investor create both business and real estate ventures. The development process links the five distinct, though evolving, phases that sequentially provide a blueprint for action. Each of the five phases deserves close attention if the product is to meet the challenges satisfactorily.

“………………. but with logic, science, and discipline, risk can be minimized”.

About the author:

Nkondo Mudenda

He is a Co-Founder and Commercial Director at Sadan Developments (an Infrastructure Development Company based in Lusaka). He is a Chartered Quantity Surveyor and a specialist in Property Finance & Development Management.

For any comments and responses, E-mail: nkondo@sadan-dev.com

By Nkondo Mudenda MRICS, PrQs, PMAQS, CAIB(SA) "…….

Palmridge Properties fails to issue title deeds to its clients

Some residents of Livingstone have complained bitterly after a Livingstone-based real estate company failed to issue them land title deeds after having completed their full payments for their purchased land.

The residents claim that they have been waiting for their deeds since September last year after making full payments.

But when contacted by the Zambian Business Times -ZBT-, Palmridge Properties defended itself by saying that the delay was due to a change of system process that was taking place at the Ministry of Lands as well as some issues that were being worked on by the Livingstone council.

Palmridge Properties Operations Manager Amos Chisha explained that the Ministry of Lands was last year changing its system during the last quarter and only managed to process a few title deeds. He also explained that the Livingstone council had some issues with companies that were sub-dividing, but mentioned that the matters have been resolved.

He explained that the title conveyance process is quite a tedious and lengthy process. He said changing of title requires one to mark off the property and that the process is only started when one is done with the payments. “So if you finish your payments today we give you a discharge letter, we give instructions to our lawyers to do a consent. Those consents are taken to the Ministry of Lands” said Chisha. He said this is to inform the state of the intention to change ownership of property from the current owner in this case Palm Ridge to the beneficiary.

He said the marking off of the land for those who completed payments has already begun and is in process.

He said it is on average not possible for someone to get his or her land title within a few months due to the lengthy processes. He noted that the completion of the process is dependent on when a particular client finished paying.

Chisha said the company is targeting to complete the title processes by the end of the first quarter of 2024. He has advised the clients not to anticipate problems and has assured them that the title processes are in progress.

He said the information with regards to palm properties and land is available at the Ministry of lands and the Livingstone Council. He has therefore challenged clients to visit the Livingstone Council and inquire if they have any doubts.

Some residents of Livingstone have complained bitterly