In our previous coverage, we explored Boodheri Mills, a flour mill established in 2017 and registered with the Canadian government in May of that year. The company’s factory was inaugurated on the outskirts of Hargeisa in September 2021. At the time of our initial reporting, Boodheri Mills was in the fundraising phase. While a flour mill is an exceptionally viable business idea, the aggressive sales tactics employed by the company, coupled with some of the projected profits and the apparent lack of basic know-how in operating a food manufacturing business in a frontier market, did not inspire confidence.
Boodheri Mills, especially the founder Mr. Abdirahman Sh Nur has disputed the veracity of our report in an op-ed published on multiple media outlets and and has threatened unspecified legal action.
At the time of this reporting, Boodheri Mills Group Incorporated, Business Number(BN): 714190329RC0001 has been dissolved by Canadian Authorities due to non-compliance of its reporting obligations with the Canadian authorities.
Two years after the flour plant’s construction and commencement of operations, financial and other documents from the company paint a grim picture. They reveal subpar execution, massive debt obligations to private banks, and a business hemorrhaging investor money at an alarming rate. In a letter dated October 20, 2023, addressed to investors, the company’s Founder, Mr. Abdirahman Sh Nur, acknowledges that their reliance on bank financing has become unsustainable. He states that the company requires $1.2 million to secure its future.
Notably, in his letter to investors, Mr. Nur is promising new investors a 12% return on their investment, with bi-annual dividend payouts. However, given the company’s current financial struggles and mounting debt, the feasibility of such promises raises serious doubts. The company’s ongoing operational challenges and cash flow issues cast a shadow over its ability to deliver on these projected returns to new investors.
In an accompanying slide deck presented to investors for the proposed $1.2 million capital injection, Mr. Abdinur appears to be promoting nonsensical figures in an attempt to entice new investment. Rather than providing a transparent account of the company’s financial situation, he simply explains away the majority of the previously raised capital as having been spent on building the factory’s infrastructure.
The dismissive manner in which Mr. Abdinur addresses the substantial expenditure of funds already raised from investors, coupled with the presentation of dubious numbers, raises significant red flags. Instead of offering a credible and detailed breakdown of the company’s financial position, he seems to be resorting to obfuscation and questionable projections to solicit additional investment. This lack of transparency and accountability regarding the use of investor funds is deeply concerning and undermines trust in the company’s leadership and financial management.
In his letter, Mr. Nur stated that he is taking back the rains of the company after 18 months haitus and is spearheading transformative changes intended to turn the company around and with the blessing of the Board of Directors, including a strategic partnership with NFMC-Al-Wataniya in Berbera for joint wheat procurement, FCAI funding for the factory’s solar project, and a vague strategic relationship with the IFC (World Bank) for potential advisory services. Notably, Mr. Nur has a track record of inflating tenuous connections, previously boasting about World Bank approval for Boodheri Mills’ viability as a business. The credibility of his grandiose claims remains dubious at best.
The statement exposes a paltry $12,500 Gross Profit from January to June—an astonishingly dismal figure. Despite the glaring absence of production, sales, and inventory details, the statement boldly declares a staggering $140,000 loss for the same period.
In direct contradiction to Boodheri Mills’ grandiose promises of independent accounting and auditing, the July statement appears to be crafted by an individual with a tenuous grasp of elementary accounting principles.
Amidst the fog of unanswered questions in the Profit and Loss statement, a glaring concern is the exorbitant electricity expense. Despite earlier fanciful claims of a Tesla-based renewable energy power plant, the reality is stark: Boodheri Mills has shelled out $39,414 on electricity costs, indicating a stark dependency on costly public electric suppliers.
While Boodheri Mills is offering the enticing promise of a 12% profit return to solicit a significant $1.2 million capital infusion from existing or potential investors, ominous signs are emerging. Current investors are signaling their desire to withdraw their investments, exposing Boodheri Mills’ vulnerability due to a lack of liquidity. The company has stated to these investors that, unlike traditional financial institutions, it does not have the liquidity to buy back their shares. The sole option for investors to recoup their funds lies in the precarious act of finding new buyers for their shares.
Notably absent from the investor document is any explanation for the exodus of investors or a tally of those seeking to exit their investments in Boodheri Mills. This lack of transparency raises further concerns about the company’s financial situation and the reasons behind investors’ loss of confidence. Without a clear understanding of the underlying issues driving this investor exodus, potential new investors may be wary of committing funds to a company facing such liquidity challenges and a flight of existing investors.
While Boodheri Mills is grappling with dwindling returns and desperately seeking 1.2 million US dollars from current and new investors to purchase wheat and stay afloat, its founder, Mr. Nur, has ventured into an entirely new business called Roobroon and is also seeking investors.
This new venture boasts high-profile government officials and celebrity promoters like DJ Subeer. Roobroon appears to be a carbon copy of Boodheri Mills, from the sales pitch down to the promises of lucrative returns. However, given Mr. Nur’s track record with the struggling flour plant and the underwhelming financial statements shared with Boodheri Mills’ current investors, this novel idea may face significant obstacles in attracting new investors despite its star-studded promoters.
While the business model of Mr. Nur’s new venture, Roobroon, remains somewhat unclear, he appears to be promoting a farming cooperative concept. Under this framework, farmers would either lease their land to Roobroon or engage in a profit-sharing arrangement to access services and equipment. The resulting wheat produced on these farms could then be used by Boodheri Mills, potentially reducing its reliance on imported raw materials. However, what stands out is the significant exaggeration in Mr. Abdi Nur’s claim, asserting that he has seen a report stating that the underground water reserves in the area hold a volume five times greater than that of Africa’s largest lake, Lake Victoria. This claim seems to be an extraordinary overstatement, raising questions about the credibility of the information being presented.
Mr. Abdi Nur who mentioned his agricultural background and expertise does not explain the basic business model, projected cost of this new enterprise and how the investors will recoup their investment.
It is noteworthy that there exists a natural synergy between Mr. Abdi Nur’s Boodheri Mills and Roobroon. However, much like his currently struggling flour plant, his new idea of a farming cooperative does not seem well-thought-out. While a farming cooperative could potentially put Somaliland on the path to food security, it is a viable but costly and labor-intensive idea. Even a basic proof of concept for such an initiative could cost more than a million dollars, primarily due to the astronomical cost of farming equipment.
Luckily, Mr. Nur only mentions one piece of agricultural equipment known as center pivot irrigation, which costs around $90,000 for a basic machine. However, when fitted with all the necessary accouterments, the cost can rise to $153,000 for every 20 farms or so that would be shared among small farmers. What Mr. Abdi Nur fails to mention is whether water drilling is part of the proposed business venture, which could push the cost for investors even higher.
During the unveiling of Roobroon company to potential investors, Mr. Abdi Nur appeared to have secured the buy-in from the then ministers of Agriculture and Investment. However, both ministers have since been sacked in President Bihi’s latest cabinet reshuffle. It remains unclear whether the removal of these two ministers will have any impact on Roobroon’s launch.
In Somaliland, it has become a common practice to invite government officials, at times even the President, to attend unveiling or ribbon-cutting ceremonies. Unfortunately, the presence of these officials may inadvertently contribute to misleading some investors, who might assume that the venture has been thoroughly vetted and approved by the government.
While the attendance of high-ranking officials may lend an air of legitimacy to these events, it is crucial to recognize that their involvement does not necessarily equate to an official endorsement or a comprehensive review of the business proposals. Investors should be cautious about making assumptions based solely on the participation of government figures in such ceremonies.
It is essential to conduct due diligence and independent research when considering any investment opportunity, rather than relying solely on the perceived credibility conferred by the presence of officials. A thorough understanding of the business model, financial projections, and the track record of the individuals involved should be the primary factors guiding investment decisions, rather than the perceived government association.
Despite Mr. Abdi Nur’s need for cash infusion to keep his struggling flour plant, Boodheri Mills, afloat and the significant debt owed to Premier Bank, his new venture, Roobroon, appears to follow a familiar formula – heavy spending on media coverage to attract investors.
While Roobroon is promoted as an entirely separate venture from Boodheri Mills and will likely have a different corporate structure, the common factor in both entities is Mr. Abdi Nur himself and its important to remember that for Boodhari Mills, Mr. Abdi Nur is actively seeking emergency cash infusion of 1.2 million dollars to stay afloat. This remarkable timing of new round of funding for the flour plant and the new venture seems to be more than a coincidence.
Rather than fostering self-sustaining business models, Mr. Nur’s operations appear to prioritize the acquisition of fresh capital to maintain operations. This approach raises significant concerns about the long-term viability of these ventures and their ability to deliver on promised returns without the perpetual influx of new investor money. Such a model is inherently unsustainable and bears resemblance to the mechanics of a Ponzi scheme, regardless of the initial intentions behind these ideas.
While the Somaliland government has recently created investment legislation, Somalilandchronicle.com has not yet examined the details to assess if adequate investor protections are built-in to ensure the public can safely invest in private ventures. It remains unclear what kind of oversight mechanisms exist to safeguard the interests of both investors and businesses.
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