SA agri-investments startup Livestock Wealth under investigation over potential illegality

South African agri-investments startup Livestock Wealth is under investigation by the country’s Financial Sector Conduct Authority (FSCA), which said it may not be in possession of the necessary licenses and thus could be operating illegally.

Formed in 2015, Livestock Wealth helps clients invest in tangible, growing agricultural assets such as cattle-breeding, free-range oxen, organic garden tunnels and macadamia trees via its platform.

Through connecting its network of small-scale partner farmers to online investors, the business model allows farmers who cannot afford to scale their business to access capital, while offering the investor an opportunity to invest in these assets, which are not influenced by financial market trends.

In a statement released last week, the FSCA, South Africa’s financial institutions market conduct regulator, announced the company was under investigation, and warned the public to be cautious when dealing with Livestock Wealth Financial Services (Pty) Ltd (Livestock FS) and Livestock Wealth (Pty) Ltd (Livestock Wealth).   

“It has come to the attention of the FSCA that Livestock Wealth may be unlawfully offering members of the public investment into livestock and/or agricultural product(s), offering profitable returns upon maturity of the livestock and/or agricultural product(s),” the statement read.  

“The Authority points out that Livestock Wealth is not authorised to render any financial services related business in terms of the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act). It is of concern that Livestock Wealth has also been making use of Livestock FS’ financial service provider number on Livestock Wealth’s website. As a result, the Authority has commenced an investigation into Livestock Wealth.”

Livestock FS is a licensed FSP, with FSP number 51237, licensed to render Category I financial products and services, but the FSCA is pointing out that Livestock Wealth does not have any such license.  

“The FSCA points out that, for a person to offer financial services in South Africa, they must be licensed to do so by the FSCA and have acquired the correct category of licence. While Livestock FS is authorised to provide advice and intermediary services relating to insurance products and pension benefits, it is not authorised to provide any financial services relating to deposits or investments. The FSCA emphasises that Livestock Wealth is not authorised to conduct financial services of any description,” the statement read.

The FSCA did, however, emphasise that the investigations are not yet completed, and the that it has so far made no findings to date. It will update the public at the conclusion of the investigation of any administrative sanctions it may consider imposing against the relevant parties.    

Livestock Wealth said it had previously been under the impression that it was operating within the law, and that it was “co-operating fully” with the FSCA’s investigation.

Disrupt Africa reported in October 2022 the startup had secured ZAR10 million (US$550,000) in funding from the Mineworkers Investment Company (MIC), through the Khulisani Ventures investment vehicle, which it said would be used to help the startup expand into international markets, while it has also received grant funding from the Alphacode Incubate programme in the past.