Derek Brink’s Senn foods is set to expand significantly encroaching into some of Botswana Meat Commission’s (BMC) safe zones such as cannery, creating hundreds of jobs in the process. Although the BMC monopoly denies Senn Foods an opportunity to export beef, the 35 year old business seeks to expand into cannery and biltong production for open markets.
According to the Botswana Trade and Investment Centre (BTIC) website, Senn Floods is explained as a privately owned domestic company that began its operations in 1982. The company currently has 480 employees. The company is into wholesome foods and their products are processed meat and beef. With the current expansion, Senn Foods is expected to hire an extra 200 to bolster the work force and has recruited some experienced former BMC employees for its cannery division. BMC recently retrenched and Senn Foods pounced.
This publication gathers that with the erection of a new bigger factory, Senn Foods which currently exports processed meat only, is on a mission to ready itself for the possible liberalisation of the beef market. Parliament has been procrastinating over the BMC monopoly Bill for the past five years. The bill is currently under deferred status. It seeks to abolish the BMC monopoly in the exportation of live cattle and beef. â€¨
The law was last discussed in Parliament when Christian De Graaf was still minister of Agriculture.
Because of the BMC monopoly, Senn Foods is not allowed to export beef. In the past they have explained that they are not exporting chicken because local prices are very hire. A senior employee at Senn Foods indicated that the company’s expansion plans are moving at a very fast pace in anticipation of a liberalised beef market, which could potentially triple the company’s earnings.
WeekendPost has further established that Senn Foods has potential customers inquiring from as far as Hong Kong, China and other Asian countries on the possibility of importing beef from Botswana. The SADC region, especially Angola and the DRC are also interested. The main impediment remains licencing because BMC is protected from competition. However, what frustrates businesspeople like Brink and others is the fact that BMC seems to shun other markets and is only interested in exporting to the European Union. Attempts by Senn Foods to apply for licences to export meat other than beef are said to have been turned down on a number of occasions.
Senn Foods already operates an abattoir which has also been revamped and increased in size. The abattoir slaughters cattle, goats, sheep, game and a host of other animals for the local market.
The considered expansion, it is said, also took into consideration the possible liberalisation of the beef market and possibly other meat for export.
SENN FOODS THE EMPIRE
Derek Brink, as part of the plans to spread Senn Foods in Africa, sold 49 percent in Botswana’s biggest cold chain distribution firm, Senn Foods Logistics, for R79.9 million ($7,7m) to RCL Foods in 2014.
RCL Foods also used the acquisition in keeping with its plans to grow its presence in Africa, which is projected to experience unprecedented economic growth in the next decade. “(Through this acquisition RCL and Vector will) offer world class logistics and sales solutions to existing and future partners in these countries,” RCL said in a statement.
Through these partnerships, Senn Foods intends to ease transportation of its goods through Africa now and in future. “Senn Foods has a lot of potential, it could employ more people, if the beef market is liberalised,” quizzed one of the company executives.
Senn Foods Logistics is involved in the distribution of dry, frozen and chilled foodstuffs. The firm currently represents almost all of Vector’s principals in Botswana, which includes Rainbow, McCain, I&J, Fry’s and QSR customers, Chicken Licken, Nando’s, Spur and Wimpy.
Senn Foods has in the past also acquired 100% issued share capital in Seafood Wholesale Botswana and in exchange, Seafood Wholesale Botswana getting 43% of issued share capital in Senn Foods. Seafood Wholesale is a distributor of chilled and frozen products including Senn Foods processed meats and dry goods.
THROW BACK – THE MONOPOLY DEBATE
Those who support the liberalisation of the beef market are of the view that if the BMC monopoly ceases, farmers would be able to sell as individuals or syndicates to whoever they choose. At the moment they are confined to selling to the BMC because of the monopolistic BMC Act. Farmers are interested in the Angola and Zimbabwe markets because they believe the BMC has neglected those.
The anti-BMC rally is also of the view that the EU sometimes makes it difficult for Botswana to sell her beef because of stringent standards. They stress that there need to address quality first and further note that if the government were to open up the beef market, it would be a free for all. They point out that only commercial farmers would benefit from the new arrangement. He argued that Batswana farmers, who do not have ranches, would be unable to develop their breed. But those against liberalisation are of the view that before Botswana opens up the market there is need to develop the local breed first.
Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.
“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).
Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.
A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.
The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”
A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.
The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.
This has since been denied by the Ministry. In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.” Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”
The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term. “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja. He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”
Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation. Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.
It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.
Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.
A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.
The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.” According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.
“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.
Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions. It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.
“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.
Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.
Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.” It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.
According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.” Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.
It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from. “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.
Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems. It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation. Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.
It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.
“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions. Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.
“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions. Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”