/ 14 October 2021

Canna-business deal for Ingonyama Trust land

Women workers pick up leaves from cannabis plants inside a greenhouse of Medigrow, a Lesotho-Canadian company that grows legal cannabis, located near Marakabei, in Lesotho. (Photo by Guillem Sartorio/AFP)

The Ingonyama Trust Board (ITB) has started a multimillion rand investment drive that will see the entity focusing on mining, high-technology agriculture and the cannabis industry through its investment arm, Ingonyama Holdings (IH).

These include the creation of AfriLion, a joint venture with Vertex Global Holdings, an investment company working in a number of sectors including cannabis, which is understood to have already secured more than $2-billion in foreign funding.

Vertex, founded by cannabis entrepreneur Gerhard Naude, holds a 51% stake in AfriLion and Ingonyama Holdings holds the other 49%. 

Naude is the founder and former chief executive officer of Go Life International, a wellness company listed in Mauritius and on the JSE.

Naude had first initiated discussions about the ITB’s entry into the cannabis industry with the Zulu king, Goodwill Zwelithini kaBhekuzulu, before his death.

Naude confirmed the initiative this week, saying that AfriLion had been set up in conjunction with IH as a means of stimulating rural development through traditional leadership structures using foreign funding.

But delays by Ingonyama Holdings in processing paperwork to be submitted to the South African Reserve Bank for the release of the funding is understood to have set back the start of the project.

IH has also started a joint venture with a company called AIN Consulting, to which R10-million has been transferred for projects aimed at “monetising ITB land”, according to several sources at the ITB.

The ITB, which falls under the land reform ministry, administers nearly three million hectares of tribally controlled land in KwaZulu-Natal on behalf of the Zulu monarch, who is its sole trustee. Its leadership has been at loggerheads with parliament and the auditor general over its financial administration, while debate has raged over its future.

Two high level panels appointed by the presidency and parliament in 2018 recommended that the ITB be reformed or dissolved, with the government appearing to choose the former route in the face of fierce resistance from the late king and the majority of traditional leaders.

Land Reform Minister Thoko Didiza has tried to stabilise its administration and finances by appointing an interim board and by sending officials from her department to assist with financial management.

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IH was registered in November 2019 and lists ITB board chairperson Jerome Ngwenya, and the ITB’s former chief executive officer, Lucas Mkhwanazi, as its directors.

According to the Vertex website, it had set up AfriLion along with the ITB as an “opportunity to develop sincere relationships for economic development”. AfriLion, under the Vertex banner … in its unique relationship with traditional leaders and their communities it is creating sustainable economic development opportunities through local knowledge, resources and expertise.” 

It lists AfriLion’s projects as “tailor-made solutions” in healthcare, property development and construction, mining and energy, agriculture, finance and retail sectors” using NGO and other funding.

Vertex also intends to acquire shares and additional investment in existing local and international cannabis businesses, as well as in medical cannabis cultivation projects that had initially been discussed with Zwelithini.

The initial pilot project has been identified for the Mtunzini area on a 75-hectare tract of ITB land.

According to the Vertex website, the company had decided to enter the medicinal cannabis market after legislation was relaxed because of the “international competitive environment and the massive international appetite for cannabis derived medicine”.

Naude is involved in a legal battle with Go Life, which last year issued a warning through a shareholder letter against him and former director Eugene Alt for allegedly “misrepresenting” themselves as being part of Go Life and of attempting to force their way into Go Life projects.

Naude told the Mail & Guardian that Vertex Global and its partner, HG Technologies, had secured more than $2-billion from international funders for its pilot projects in South Africa and elsewhere on the continent.

“The potential of this can be tenfold after we as a group have proved that we can deliver on our promises,” he said.

A joint venture agreement was signed with Ingonyama Holdings in September 2020, and a board was appointed in May 2021. ITB board members also acted as non-executive directors of AfriLion.

IH was not making a financial contribution to the deal.

“Due to the value, land and other infrastructure of Ingonyama Holdings and as a 100% subsidiary of Ingonyama Trust, we do not require any financial contribution from Ingonyama Holdings,” he said.

Naude said AfriLion was still working on establishing policies and other governance requirements and was drafting an agreement for the ITB to sign. 

“We are planning for a few projects to kick off in the first quarter of 2022. As a group we will not only focus on KwaZulu-Natal, but also on the rest of Africa,” he said.

Naude said although there were a variety of projects planned for the future across sectors, the initial focus would be on agricultural projects.

“We have already engaged with communities, where we will focus on creating jobs and uplifting the lives of all the people staying in those communities. The focus will thus be on land already transferred to the community in the case of the ITB,” Naude said.

Ngwenya failed to respond to calls and emails from the Mail & Guardian over a two-week period.

But at a South African National Editors’ Forum earlier this year he said the IH was set up as an investment wing as legislation prevents the ITB or the trust from doing so.

“In terms of the PFMA [Public Finance Management Act], when a state entity seeks to go into what it calls PPP [public-private partnership] or to establish a company, it must notify the treasury as well as the executive authority. The ITB and the king realised some time back that it needs to do more to accomplish its mandate, but that it was not achievable within … the legal framework. We therefore exercised that prerogative,” Ngwenya said.

He said at the time that IH was “becoming operational” after a period of securing resources to allow it to do so. “It is now becoming even more operational because we are in a position to ensure that it operates.”

Ngwenya said Ingonyama Holdings would “allow the trust to do a number of things” including “those aspects of the mandate of the trust which cannot be discharged by the board because of the limitations”.