National Agro Processing Plant (NAPRO), a horticultural fresh produce processing operation in Selibe Phikwe will be negatively affected by the ongoing rationalization of parastatals in government ministries, WeekendPost has established.
In the Ministry of Agriculture and Food security where NAPRO is funded and supported from, government is moving swiftly to merge National Food Technology Research Center (NAFTRC), Botswana National Veterinary Lab and Department of Agricultural Research in to one parastatal. The new government funded organization will be called National Agricultural Research & Development Institute (NARDI), a one stop Agric R & D outfit.
National Agro Processing plant is an investment by Botswana Government through the National Food Technology Research Center (NAFTRC) Investment Company, and was established to increase shelve life of locally produced horticultural products by processing them into sources, pickled canned and different packaging models. The plant started operation May 2016.
According to information gathered by this publication NAFTRC‘s amalgamation with the other two institutions will suffocate NAPRO‘s technical backup from its parent company “things are moving at a slow pace, our technical support in terms of research and improvement of our operation is very limited because of this transformation” disclosed a source at the Phikwe based processing outfit.
NAPRO is a highly research and technical based operation that leverages on the latest technology to understand the behavior of horticultural produce for improved taste and prolonged shelve life. According to information from Phikwe the Plant is already facing challenges in increasing its market reach because of subdued funding and limited technical support for plant expansion and improvement of processing components efficiency for increased output.
“NAFTRC is a food research institute, its mandate is specific but the role is way bigger and broad on its own, because of the current insufficient local food production, for the organization now to be merging with other Agricultural bodies is not a step in the right direction,” opined an expert at NAFTRC who preferred anonymity.
According to the source NAFTRC has being doing well with cutting edge research undertaking; however the institute has been facing some challenges with commercialization of its ideas. “Our capacity to monetize and commercialize our food processing ideas will be further sponged when we now under one house with two other entities , that means , financial assistance and technical acumen will be wrestled for,” he said.
Weekendpost established that the three parastatal mergers have been on the pipeline since 2011 and government is fast moving to have the processes complete by end of this year and the new parastatal fully resourced and functional by beginning of 2020/21 financial year in April next year.
The National Agro Processing plant was strategically positioned in the SPEDU region to leverage on the region high agricultural potential and provide a boost to the ailing economy. NAPRO processes onions to caned pickled, fully nurtured tomatoes to tomato source and different vegetables to canned pickled achar amongst other products.
The company introduced their products to the consumer market for the first time ever last week, in September 2016 under a retail name “Harvest Haven”. The product started off with placement in Phikwe local supermarkets until reaching mega chain retail outlets year later. For NAPRO do get a better market clinch in the food processing industry experts say the company should retail all other food processing offerings by local SMMEs “Government should NAPRO to distribute products of indigenous Batswana who fail to list with large sales companies and retail outlets, because of lack of capacity,” suggested a retail commercialization expert at NAFTRC.
He explained that NAPRO needed develop a serious packaging and distribution wing to support other small scale indigenous food processing enterprises at subsidized rates citing. NFTRC was first established as a small project in 1984, then called Botswana Food Laboratory (BFL). BFL then evolved into the Food Technology Research Services (FTRS) in 1987, funded by the then Ministry of Commerce and Industry (MCI), but managed by Botswana Technology Centre (BOTEC).
Following a comprehensive evaluation of FTRS in 1997, FTRS gained autonomy and was transformed into an independent company limited by guarantee. The company then adopted a new name, National Food Technology Research Centre. As mandated by the Government of Botswana under its current form, NFTRC is geared towards generation of food technologies that enhance economic diversification, food security and quality through sustained end user focused research and development.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”