The National Agro-Processing plant (NAPRO) introduced its products to the consumer market for the first time last week on September 28th. The coming to life of the plant further gives hope to the resurgence of Selibe Phikwe, a town who star dimmed with the collapse of copper-nickel prices.
Daily Needs and Saverite supermarkets, local retail powerhouses in the Selibe Phikwe area were the first to stock the highly anticipated locally produced tomato source and according to NAPRO, the products were already off the shelves before Independence Day celebrations. The feed from customers was very positive.
However the processing entity which has been in operation for about half a year is still operating below capacity. In an interview this week, NAPRO senior management revealed that there is a lot of potential and that the progress of the plant will be monitored closely.
The Operations Manager, Mr Ramogoma Kaisara, revealed that setting up a fully equipped processing facility with required standards was an expensive and labour intensive undertaking.
According to Kaisara, most of their startup capital was consumed by transforming and upgrading the warehouse to the required standards of a processing facility.
“We had a challenge of starting from completely nothing, thus a huge part of our allocated funds were channeled to pre-production adjustments. We had to convert an empty warehouse into a suitable working space, partitioning offices, and fitting the plant with world class processing equipment,” said Kaisara.
Kaisara further observed that they also had to provide on-the-job training for their most of their staff members and capacitate them further with processing skills thus affecting production schedule.
The National Agro Processing plant is an investment by the Botswana Government through the National Food Technology Research Center (NAFTRC) Investment Company.
Its mandate is to increase the shelf life of locally produced horticultural products by processing them into finished products, such as sources, pickled canned meat and different packaging models. The Plant started operations on May 27th this year and has been experiencing production challenges from inception until the end of September
“We officially started processing end of May this year, from that time we had to observe our equipment, make further raw material tests , and adjust to processing requisites that we only discovered after production commencement,” said Kaisara.
The NAPRO team also revealed to this publication that the plant is currently operating below full capacity due to the stated production challenges. “At full peak, the plant should receive raw material of about 32.021 tones of tomato, but to date we are only able to process just about 60 % of that.”
The Operations Manager further emphasized that the plant has not yet experienced any shortage in provision of raw materials from local farmers. He observed that this contradicts reports that local farmers are incapable of feeding the processing plant with vegetables for it to realise full capacity production.
Kaisara said he was confident even at full capacity the plant will not run short of raw materials. “We have sufficient provision of raw materials, our local farmers here in Selibe Phikwe are supplying enough or even more than enough for our plant’s capacity.”
“In addition to that, we are certain that after the electrifying of Motloutse farms and commencement of farming at Thune irrigation schemes, we will have abundant supply of raw materials, which might even require us to expand our plant,”explained Kaisara.
NAPRO NEEDS CAPITAL INJECTION
For her part, NAPRO Finance & Administration Manager, Ms Kebareng Makome indicated that the financial figures of the plant as a company are not looking good. According to Makome, the funds allocated to the plant are depleting hence the need for more financial injection to help the plant realize full production to ensure it makes profits.
Makome was complementing statements made by Ms Metlha Mangwane, the Sales & Marketing Manager, to the effect that NAPRO has rigorous strategies drawn up to penetrate the market, but currently could not implement those due to budgetary constraints.
Mangwane explained that her team is in talks with retail giants such as Choppies, Pick n Pay and others at group headquarters level to woo them ‘into absorbing their products.
DailyNeeds and Saverite are resident retailers in Selibe Phikwe hence it was easy to reach out to them. The Bobonong Cooperative Society retail outlet also started selling the products this week.
STRATEGIC LOCATION AT SPEDU REGION
The processing project, which is strategically positioned in the SPEDU region, was financed by Office of the President. Vice President Mokgweetsi Masisi visits the plant from time to time alongside the troubled BCL mine.
The Vice President was quoted earlier this year at Serowe Agricultural Show expressing high expectations for the investment. NAPRO processes onions to canned pickled, fully nurtured tomatoes to tomato source; and different vegetables to canned pickled achar amongst other products.
According to the Public Relations Officer, Mr Keontse Mothibedi, the company is optimistic that after achieving full peak production capacity, the plant will venture into different agreements like packaging and branding for retail outlets which will assist them penetrate the market and build consumer confidence.
The company expects to start receiving quantifiable sales proceeds by December 2016 and from that time, the finance department will be in position to compile a proposal after considering financial projections.
According to the NAPRO team, they need more cash to help the plant attain profitability and autonomously run itself as a profit making entity.
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”