Wednesday, April 17, 2024

Lawrence Sikutwa dissolves LSA Group as the financial situation worsens at Madison

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Lusaka businessman Lawrence Sikutwa has dissolved Lawrence Sikutwa and Associates Group of Companies, a conglomerate of companies named after him where was Group Chairman.

And Madison Life has stopped paying of Commissions to all its Sales Staff on non-remitted premiums as a cost saving measure to protect the wellbeing of Mlife.

The LSA Group founded in 1995 was an indigenous conglomerate with interests in both life and general insurance, asset management including pension fund management, unit trusts, and stock broking and property development and business advisory services as well as tourism.

Mr Sikutwa dissolved LSA Group at the beginning of May in order to restrategize and protect the other units in the business after struggling to service a number of personal loans he acquired.
Highly placed company sources indicated that by dissolving LSA Group, Mr Sikutwa hopes that separate units will have a higher chance of staying afloat and not suffering contagion.

Late last year, Investrust Bank sued Mr Sikutwa in his personal capacity, his tourism company Amalgamated Tourism Investments and LSA Group for failing to service K11.6 million in unpaid mortgage.

Early in January 2020, Cavmont also sued Mr Sikutwa over a US$240,000 loan forcing the Securities and Exchange Commission to take temporal possession of the affairs of Madison Asset Management Company Limited (MAMCO).

An audit conducted by KPMG Zambia dated September 30th 2019 showed that Group accounts are in red and that the shareholder, Madison Financial Services Plc, has shown commitment and played a significant role in the recapitalisation of the business operations of Madison Asset Management Company Limited (MAMCO).

But the board said liquidation was not in the interest of all stakeholders.

“Due to the following factors, the company has experienced challenges since 2017 which have led to losses: (a) the general economic environment was affected as a result of elections that have a tendency to slow down the economy due to the uncertainty they created; (b) increased interest rates; (c) Stiff competition from deposit-taking microfinance companies offering higher yields on the market reducing margins on the FIF; (d) Slowdown in the economy affecting the housing sales and reducing the yield on assets and therefore the cost of borrowing significantly higher than the return earned on the assets; (e) Illiquid property portfolio that cannot be easily disposed making it difficult to take opportunities on the market from the higher attractive rates; (f) fluctuating exchange rates that affected the cost of borrowing; and (g) The Securities and Exchange Commission (SEC) has deemed the product illegal hence the urgent need to unwind the fund. However, the fund had significant asset- liability mismatch that requires to be wound down over a period of time,” the report reads.

“Realising the seriousness of the financial position of the Company and the risk of liquidation, the Shareholders and the Board have considered a number of options in the last twelve months and decided that liquidation was not in the best interest of all the stakeholders because the reasons that led to the company being in this position could be addressed by restructuring the operations of the company. In that respect, they have taken the following steps: The Board has engaged the Shareholders of Madison Financial Services Plc to assist in the recapitalisation of the business of the Company. The company has received ZMW 16,100,000.00 and a further ZMW 60,000,000.00 is set to be remitted by 30th June 2020. A number of assets amounting to ZMW 143,774,524.00 and attributable to the FIF have been earmarked for disposal. The company is also making all efforts to ensure it remains a going concern. By initiating the Scheme of Arrangements, this process will ensure that all the assets are distributed fairly and in a way that maximises the return to all the Creditors equitably. The company has taken cost rationalisation measures, including closure of the town office and relocation of the Kitwe branch office to a cheaper location. Staff restructuring has also been done to reduce the staff numbers. The company has put on hold all budgeted capital expenditure items…Despite the cash flow challenges, the Company and its management have worked hard to transform the business and Company, into a well-known brand in the Zambian financial sector.”

And in a circular from Madison Life Managing Director Agnes Chakonta, the company announced that it will no longer pay advances and Commissions on non-remitted premiums.

The company said it is making frantic efforts to collect premiums which have not been serviced from Government through PMEC and from Konkola Copper Mines(KCM).

30 COMMENTS

  1. How I hate getting loans!

    I would rather do with the little I have than go borrowing.

    Just look at what reckless borrowing has done to our country.

  2. I too wish the best to the guys managing the restructuring in such difficult times. That’s wat it takes to be real businessmen. U face tough times sometimes. Just do the right thing guys and u may cme out of it much stronger. I for one was proud of such a good local brand as Madison. Anything named Madison exhibited professionalism and class.

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  3. Time to fasten our belts…when PF bandits scream “COVID here”…they think its a joke…all they see is donor funds but they dont realize the impact of falsifying COVID figures…as long as they keep on screaming COVID here…no investor Will come and invest in Zambia and tourists will stay away….and we have someone who swindled a widow of US$1500 and when he became President his net worth was less than US$2500….Bandit Chagwa

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  4. @Mumamba
    Very sensible comment…..times will get even harder in the next few months….unfortunately we have a clueless Bandit President Edgar Chagwa Lungu busy auctioning the country to the chinese

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  5. It was expected . No wonders . . .the man has 100’s of mistresses costing him millions every month, some of them his grand daughters age !

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  6. His businesses sounds like HH’s , very difficulty for 90% of Zambians to understand. Not Ba GBM with his thuggery businesses of from daily cash drivers, slapping employees, HH may have advised Sikutwa how to avoid being robbed by PF’s gun-carrying “liquidators”.
    HH is smarter, he don’t have a “Group of Companies”, so its damn difficulty to sue him or go after him. And the best in separating companies is receiving a salaries from, as many companies you force yourself as employee (Director, CEO).
    I can go on and on, because this are the people I wish to hang-out with, NOT fi Lusambo, atase!!

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  7. The liquidation of the LSA group started years ago. Lawrence even failed to sustain his clothing store at Manda Hill called Petauke Place …

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  8. Why can’t he access K10 billion stimulus package? Is it it reserved for PF thieves only? He needs support since he is citizen entrepreneur. PF MUST GO!

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  9. But people kwena! How does president Lungu. Come in here? LSA is talking of a business resistation strategy. So that it stays afloat and saves many Zambians jobs while he makes a profit too! This hate is becoming a disease in Zambia.

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    • The company said it is making frantic efforts to collect premiums which have not been serviced from Government through PMEC and from Konkola Copper Mines(KCM).

      Yaks have you not taken note of this statement, This PMEC has become most business’s tick, always holding on to deductions made on salaries for civil servants and not remitting them to the rightful organizations on time, go ask loan companies, pension funds, including insurance companies PMEC is also killing these businesses, this something that we never heard in unip and mmd, that why people are condemning guess who?

  10. He comes in because he his the clueless so called humble leader who has messed up the economy… Had Zambia not been borrowing like the is no tomorrow, the country would have reserves, the would be less pressure on the currency, inflation would be low and exchange rate would be stable… this would lead to lower interest rates and a number of companies like even the one mentioned in this article would survive. Result people would not loose there jobs…
    I understand this is too advanced for you to understand… By the way i never got a PhD from the below university.

    Dr Lubinda Habaazoka
    PhD Rostov State University of Economics
    World ranking of university (2020) : 6196

    University of Zambia
    World ranking (2020) : 2229

    I rest my case ……

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  11. @Chikubabe, indeed PF is anti-business. Businesses that are straight forward and transparent cannot thrive and survive under this regime. All the key fundamentals needed to create prosperous companies have been messed up. You can only survive in business by connections and contacts; kick-backs through tenders. The private sector has been bombarded with several regulations, fees, fines and penalties and this is exactly why the mines are protesting. Covid-19 is just the final nail in the coffin. But if you’re a Chinese business and can pay as well as have contacts, the period of PF in government has been heaven on earth. However, the question we have to ask is, at what cost to the ordinary Zambian has this all been done??

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  12. What we should learn from Western economies and some progressive African economies such as South Africa, Kenya and Nigeria is that only locally owned enterprises can sustainably develop the local economy, not foreign investors. When a significant local entrepreneur, whatever his shortcomings, faces challenges and failure, we should all show concern and if necessary Government should offer rescue incentives

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  13. It’s always sad when a local business goes down. LSA isn’t like these changanya business men who don’t even pay their workers. LSA Group has employed many graduates and it’s sad that it has to come to this. Let him revisit his business model and try to package the business again. He should now consider going on LuSE and I will definitely buy those shares

  14. Modern slavery is now in form of LOANS.
    Loans are depressive both at personal and national level

  15. Too much hatred among ourselves. LSA are re-strategising. Check yourself what have you done for mother Zambia.

  16. I am really saddened by this as LSA and Madison was truly a reputable brand that inspired confidence in the Zambian financial sector, both for consumers and professionals in the financial sector. Over the last couple of months I read and followed the wows of the company I attributed it to normal business cycles and that it would come up on top. Even the initial segments of this article showed promise that a unbundling and restructuring of the group would lead to some viable units of the group surviving. What gives me cause for concern is that this collapse is being attributed to personal loans by Lawrence. Surely, how is this possible for a corporate entity of LSA’s stature!? Company Law and Corporate Governance 101 tells me that this should not be possible in a properly functioning…

  17. Surely, how is this possible for a corporate entity of LSA’s stature!? Company Law and Corporate Governance 101 tells me that this should not be possible in a properly functioning business environment. Where were all the boards, auditors and regulators who would have stopped the rot? So many checks and balances which seem to have failed at so many levels. Quite a disappointing episode which makes one really question what one would have thought was a blossoming local indeninous banking and financial sector. Meridian, Finance and now Madison gone. Won’t be holding my breath on the fate of Investrust. A real pity!!

  18. Based on this article, it looks like this guy didnt make good investments long term. The banks like any other business are entitled to their monies, so he made bad investments in real estate and they didnt pay off, too bad!

  19. The reason for this is not PF or failure of the many graduates employed in LSA. This is purely a corporate governance failure. How? Just like many Zambian companies, he failed to detach himself from the governance of the company. See the difference with Zambeef, listed and the founder retired thats what it should be. Even this decision is all seen as his personal decision. The late Ben Mwila was also running his companies in a similar manner. Let us not blame government for our moral failures or poor decisions.

  20. Just learnt that this is actually fake news but my observations stand because failure to allow professionals running organisations is the source of failure in many Zambian companies including government. Most successful companies like Microsoft, Coca cola, DHL etc have had their founders step aside to allow professionals run them. If Mr Lawrence S. wants LSA to survive he should leave it in the hands of professionals and as someone suggested they float shares and every genuine Zambian purchases shares as a way of securing what was started by one of our brothers so that we are not a laughing stock but he has to let go of the governance of the institution to win Zambians confidence.

  21. ZFI HOLDING two s the tax Haven company Sikutwa firmed in January 2015 and it was the start of Sikutwa’s me net laundering greed.
    On 18th May there will be Extraordinary general meeting of Madison Finance and agenda is to sell of Madison Life and spun off mMafison General.Sikytwa has been siphoning off millions every year through management fees to Mauritius, kickbacks from property developments and now when the Ponzi scheme is laid bare he plays Zambian card. He deserves to be behind bars for stealing from retired army officers their pension benefits, small policyholders their Dave ngs for their children education. No mercy, he is a thief, corporate world Robber

  22. SEC, PIA, BOZ all useless regulators, allowed inside borrowings, stealing by Sikutwa who is now crying wolf after looting retired army officers savings, depriving parents savings, swindling pensioners funds.

  23. @ZFI, what is your source? Do not spread rumors. There is no EGM for LSA group. Monday is not far to expose your lie, PF cadre. Sikutwa is as successful business man as is HH. He will be in government as a successful busibessman.

  24. i have read through the story line and as well followed the comments, firstly Mr Sikutwa did a lot for the Zambians at large by creating jobs and as well listing an indigenous owned Zambian company. we must give credit where its due that said, far beyond the point, an inquiry to an full investigation should be opened should the mere allegations be proved. indeed there is no smoke without fire. but lets not conclude and finger point until the facts are proven beyond reasonable doubt whether he squandered the retirement packages our officers and the like. Secondly this environment is very challenging to do business because of the circumstances that follow in the midst of all i see a recession, yes we as well cannot dispute the fact that some wrong management fundamental errors are at bay.

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