29 January 2024
The Financial Sector Conduct Authority (FSCA) has issued a warning about the activities of a company that offers investments in agriculture, particularly livestock.
According to the FSCA, caution should be exercised when dealing with Livestock Wealth (Pty) Ltd and Livestock Wealth Financial Services (Pty) Ltd.
Livestock Wealth has operated in South Africa since 2015 and offers investments in macadamia nuts, cattle, agricultural property and vegetables. It describes itself as a “crowdfarming” platform that connects investors with approved farmers.
According to its website, investors can buy assets (cattle or crops) from farmers through Livestock Wealth. The farmer then raises the assets and buys them back when they are fully grown, providing investors with income from the sales transaction.
Illegal activities?
“It has come to the attention of the FSCA that Livestock Wealth is unlawfully offering investments in agriculture and/or agricultural products and also offers profitable returns when the livestock or agricultural products are fully grown,” said the watchdog.
According to the FSCA, Livestock Wealth is not authorised to provide financial services under the Financial Advisory and Intermediary Services Act (Act 37 of 2002).
Ntuthuko Shezi, founder and CEO of Livestock Wealth, told Moneyweb the warning is a mistake. Livestock FS has a financial service provider licence, he said, but Livestock Wealth does not and may not provide financial services.
According to the FSCA, Livestock Wealth uses Livestock FS’s financial service provider number on its website, and therefore the company is being investigated.
Gerhard van Deventer, head of investigations at the FSCA, told Moneyweb that when looking at the company’s website, the services of the two are intertwined. He believes this is irregular and investors should know exactly what they are dealing with.
Additionally, Livestock FS’s licence is limited to insurance and pension products. Therefore, it may not provide financial services related to deposits and investments.
Van Deventer said that when a company applies for a financial service licence, it applies within a category – short-term insurance, for example. It may not provide services outside the licensed category.
According to Van Deventer, the FSCA investigation is not only about whether Livestock FS is using the wrong licence but also about what happens with the investments and whether there are indeed farms and livestock.
In its statement, the FSCA emphasised that the investigation is continuing and no findings have been made. It said it will inform the public about any administrative sanctions that may be considered against the parties involved.
