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Zambeef Products PLC
Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
Project number 29013
Country
Zambia
RegionSub-Saharan Africa
SectorOther Animal Production
Department
Company nameZambeef
Environmental category:B
StatusActive
Date ESRS disclosedMarch 31, 2010
Previous EventsInvested: April 13, 2011
Signed: June 29, 2010
Approved: June 10, 2010
View Summary of Proposed Investment (SPI), click here

OverviewCategory &

Applicable Standards
Key Issues

& Mitigation
Community/

Engagements
Client's

Documentation

Overview of IFC's scope of review
The IFC’s appraisal of this project included the following:

Site visit to the Ogun state farm and Lekki meat processing center, Lagos, Nigeria on the 5th of October 2009.

Site visits to Zambeef’s Zambia operations, namely;
Chiawa grains farm in Chirundu
Zambeef and Zamchick Inn in Chirundu
Huntley (Chisamba) Farm – Zambeef’s largest agro-processing complex
Zamanita – edible oils processing plant in Lusaka
Novatek stock feed plant - currently under construction
Zamleather Limited, and
Masterpork slaughter and processing facility

Review of available corporate environmental and social documents, including;

Evaluation of Food Safety and Related Aspects (actual status and possible gap to international standards) at Zambeef Products PLC, November 1-20, 2009 and the associated action plan
Zambeef Products PLC Environmental & Technical Services Department Organogram and the associated job descriptions
Huntley Farming & Agro-Processing Complex Environmental Issues, Jones Kayawe, September 2009
Environmental Impact Statement for the Muma Oil Palm Plantation Project in Mpika District, Northern Province, October 2006, and
A number of Environmental Project Briefs related to site-specific installations, such as Chiawa fuel filling station, July 2009

The IFC’s appraisal came immediately after that of DEG and was, to a large extent, influenced by the DEG appraisal, particularly with regards to site visits. It was agreed between IFC and Zambeef that, since the DEG consultants led by Dr. Reinhardt Capel used IFC standards as the basis for their appraisal, only a sample of operations would be visited by IFC. Zambeef would, in turn, share the findings of DEG with IFC and these findings would be used as part of IFC appraisal. The above mentioned sites visited by IFC were selected in such a way that a cross-sectional approach of all representative operations for Zambeef was included.

DEG’s Technical Assistance funds are essentially DEG’s grant/aid monies used by DEG to assist DEG’s clients in improving social responsibility, environment and health & safety issues. As part of this agreement, assistance will be provided to Zambeef to upgrade its environmental standards on a 50% cash assistance basis. In November 2009, DEG agreed to fund 50% of environmental consultants’ costs in assisting Zambeef with developing and implementing a comprehensive Environmental Action Plan.

The general objectives of DEG’s phase 1 work were to:

Evaluate current situation regarding food safety and related aspects (environment and occupational health and safety), and
Identify gaps to reach international food safety standards.

DEG conducted site inspections at five Beef abattoirs, five ZamChick Inns, nine Butchery outlets, Edible oil Plant (Zamanitha), Feed Processing Plant, one Pork processing plant, Chicken processing plant, Flour Mill and bakery, Milk Processing Plant and four farms. Although the Terms of Reference (TOR) highlighted that all the 8 abattoirs were to be visited, three were not visited. These were Livingstone which was non operational at the time, Senanga and Chipata due to time constraint and limitations in accessibility. The consultant proposed to visit and evaluate performances at these sites in the 2nd quarter of 2010. Details about all the visited sites inspected are elaborated in the report “Evaluation of Food Safety and related Aspects” - Actual status and possible gaps to international standards at Zambeef Products PlC, November 1-20, 2009.

The reporting, including an analysis of what was found, as well as suggested action items to improve the weak points was presented to respective management at the plants during the visits. The consultants also presented their findings to senior management on November 19, 2009.

The DEG consultants reported that there is motivated and skilled management in Zambeef, good relationship with the authorities, all equipment is calibrated by the Zambia Bureau of Standards and that the company appreciates the need for companywide quality procedures and training.

On the downside, the DEG consultants identified the following general serious shortcomings:

Weak implementation of Good Manufacturing Practices, such as hand washing steps, separation of dirty from clean areas, storage of food products on the floor, foreign material control, workers safety and staff movement between plants.
Weak controls to minimize environmental impacts due to lack of proper solid waste handling and insufficient effluent treatment, particularly the existence of unlined effluent ponds at almost all the visited beef and pork operations.
Gaps in product identification and labeling, making traceability difficult or impossible.
There is a high risk in food safety, due to microbiological contamination and insufficient foreign material control.

To respond to the above identified weaknesses, the DEG consultants indentified and recommended urgent steps for all plants to be implemented immediately within three to six months, and these are:

Ensure the Basics in GMP are in place and followed to reduce the food safety risk, i.e. hand washing first (install stations in right places), no food on floor (use plastic pallets), respect border between clean and dirty areas and practice good housekeeping.
Comply with environmental legal requirements; establish controls for effluents and solid waste.
Handle live animals correctly reduce the stress of the animals (transport, unloading, rest time in lairage) and follow basic rules of animal welfare for live animals and slaughter procedures.
Provide training of the procedures to staff and supervisors.

The DEG consultants also recommended midterm action plans for all plants to be implemented after the urgent steps identified above, and these are:

Employ a company-wide systems manager: the new position must have the necessary authority and place in the hierarchy of the organization – this has already been implemented.
Implement quality management: follow the HACCP concept (Hazard Analysis Critical Control Points), and develop line-specific programs to ensure food safety.
Education and training: develop systematic training programs with basic, intermediate and advanced content about food safety, quality management, OHS, and environmental management for all managers.
Protecting the quality: implement and upgrade microbiological control programs so that the threats of microbiological contamination are known and risks can be reduced.
Knowing the status: carryout regular self audits on the status of compliance with operations procedures, GMP, etc. and give feedback about the enforcement level, and
Demonstrate quality

DEG has since agreed to co-finance Phase 2 of the Environmental Action Plan, which will encompass direct implementation of the mitigation measures and the establishment of a Quality Management System” identified above. Zambeef has already initiated the implementation of the Environmental Action Plan agreed upon with DEG.
Project description
Zambeef Products PLC (“Zambeef” or the “Company”) is one of the largest agri-business companies in Zambia and the SADC region, involved in the production, processing, distribution and retailing of beef, chicken, pork, and dairy products among others. Over the last two years, the Company has been on an expansion drive, including acquisitions in Zambia and setting up operations in Ghana and Nigeria. The Company is investing in capital expenditure for the rehabilitation of acquired assets and replicating its Zambian model in Nigeria.

IFC intends to invest US$7 million debt and US$3 million equity in Zambeef. This proposed investment is for the Company’s Zambian and Nigerian investment programs.

The following list presents an overview of Zambeef’s operations:

Abattoirs
Feedlot
Milk and milk processing
Chicken and egg
Masterpork
Cropping grains
Cropping plantation
Flour mill and bakery
Zamanita
Novatek stock feed
Leather and shoes
Butchery outlets
Fast food outlets
Transport and distribution

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