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Friday, 19 April 2024

Botswana losing shine in the beef market – BIDPA

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BMC’s share of cattle sales declined to 40%

While it is widely acknowledged that the beef industry in Botswana plays an important role as a source of foreign exchange, rural livelihoods and employment, the Botswana Institute of Development Policy Analysis (BIDPA) through a recent working paper have demonstrated that the country is an insignificant player in the world beef market.


A paper by Dr Tebogo Seleka and Pinkie G Ketshabile illustrates that the industry has experienced declining output since the 1970s, leading to a steady fall in exports.  “This scenario questions the industry’s sustainability and its continued role as one of the country’s leading sources of foreign exchange,” the two researchers point out.


For the continued sustenance of the beef industry in Botswana, it is important that beef exports remain competitive in the export market. However, the fall in exports experienced since the 1970s may have contributed to declining export competitiveness over time. Seleka and Ketshabile therefore tackled this issue by assessing the export competitiveness of the beef industry in Botswana, employing various indices of RCA.


The working paper revealed that Botswana has been the most competitive beef exporter in the SADC region, followed by Namibia. Export shares against the leading beef exporters indicate that Botswana is an insignificant player in the world beef market.


“However, all other RCA indices suggest that the performance of Botswana’s beef exports was generally impressive, with its competitiveness trends following those for major world beef exporters. Botswana’s beef industry was the most competitive from the early 1960s to the late 1980s, after which it was surpassed by some of the leading beef exporters.”


Seleka and Ketshabile noted a few factors underlying Botswana’s beef export competitiveness.

INSTITUTIONAL FACTORS

By way of background, Seleka and Ketshabile share that the BMC, a state trading enterprise, has been the sole exporter of beef since its establishment in 1965, which was made possible through a statutory instrument establishing the entity. Its establishment was geared at exporting beef to Britain, owing to colonial ties of the two countries. Botswana beef has also been accorded preferential access into the EU market through various trade arrangements.


“Before 1975, preferential access was made possible through the Commonwealth Preferential System, which allowed for duty free access of Botswana beef to the British market. From 1975 to 2000, non-reciprocal preferential access was made through the beef protocol of the Lomé Convention, signed between the European Commission (EC) and the African, Caribbean and Pacific (ACP) countries, which exempted ACP beef exports from ad valorem duties levied to non-ACP beef imports into the EC.9 Non-reciprocal trade preferences were further extended through the Cotonou Agreement (CA) during the period from 2001 to 2007, to give the EU and ACP countries time to negotiate WTO compatible Regional Economic Partnership Agreements.”


In 2009, Botswana, Lesotho and Swaziland signed an interim Economic Partnership Agreement (EPA) with the EU, which allowed for the continuation of non-reciprocal preferences. The interim EPA allowed for duty free/ quota free access of Botswana’s beef into the EU market while EU/SADC EPA negotiations were ongoing.

The successful conclusion of negotiations on an EPA between the EU and the SADC EPA Group (Angola, Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland) on 15 July 2014 will result in the signing of a substantive EPA in the near future to facilitate the continuation of the ongoing preferential access of Botswana’s beef in the EU market.


According to the researchers, without doubt, the above institutions have played critical roles in stimulating the development of a competitive beef industry in Botswana, through promoting export market access.


“However, the same institutions are potential threats to beef export competitiveness in Botswana. First, the single export channel, through a state trading export monopoly, means that the collapse of the state trader may lead to an instant collapse of the beef industry in Botswana. Tis potential threat is not farfetched in that the BMC has operated at idle capacity since the 1980s when its throughput began to steadily decline. Such eminent threat is also reflected in the poor financial performance of the BMC, characterized by declining and negative profits.”


They further note that Botswana’s competitiveness is enhanced by duty free/quota free access of its beef exports to the EU market, while the country’s key competitors are subject to high import duties in the same market.  As a result, Botswana’s beef exports are priced higher than world market prices because of trade restricting protectionist policies in the EU market.


According to Seleka and Ketshabile the Trade reforms in the EU that ease trade restrictions would lower beef prices in the EU market, further leading to preference erosion and reduced beef export competitiveness in Botswana.


“Finally, changes in standards in the EU market pose risks to Botswana’s beef industry, particularly where compliance capacity is limited or compliance costs are prohibitive amongst communal farmers. For example, the requirement that cattle should have been kept in a single enclosed area for a given period before they are slaughtered for the EU market is not practical under communal arrangements and serves as a trade barrier.”


According to Seleka and Ketshabile, given that over 80 percent of Botswana’s cattle are in the communal production system, this requirement would therefore lead to reduced exports to the lucrative EU market, impacting adversely on beef industry competitiveness.
 

SUPPLY-SIDE FACTORS

Botswana’s beef cattle are produced under two distinct production systems of communal and commercial (ranching). The communal system is the most prominent and accounted for more than 80 percent of the country’s cattle population during the period from 1979 to 2012. However, the communal system is less productive than its commercial counterpart.


Seleka and Ketshabile have established that the steady and consistent fall in real cattle producer prices, from P1,228 per 100kg of carcass in 1974 to P776 per 100kg of carcass in 2005, has had long term adverse effects on beef export competitiveness in Botswana.


“This period largely coincides with the reduction in export competiveness against SADC countries and the leading beef exporters. Empirical evidence has also shown that the occurrence of drought in Botswana causes farmers to increase cattle sales, as a strategy to minimize the risk of inventory loss from drought-induced cattle mortalities (BIDPA 2006).”


 However, in subsequent good years following drought, farmers engage in inventory accumulation to rebuild their breeding stock, and thereby reducing cattle sales. Thus, such drought-induced decisions have had both short- and long-term adverse impacts on beef export competitiveness.

Foot and Mouth Disease (FMD) outbreaks have also impacted adversely on cattle sales directly through the banning of trade from affected areas. Moreover, FMD outbreaks have had long-term adverse impacts on the beef industry where they have led to the imposition of mandatory cattle destruction in the affected areas to halt further FMD spread.


They note that mandatory cattle destruction impacts adversely on cattle sales to the BMC and overall beef exports. In addition it also reduces the breeding stock now, leading to a reduction in future cattle sales, as these (cattle sales) positively relate with cattle inventory.


“Moreover, subsequent restocking exercises with cattle from disease free areas divert cattle sales from slaughter, further impacting adversely on cattle sales and beef exports. All these decisions adversely affect beef industry competitiveness in both the short- and long-term. In sum, the predominance of the communal production system, stagnant cattle population, high communal cattle mortality rates, low communal cattle offtake rates, declining cattle producers’ prices, and recurrent outbreaks of drought and livestock diseases have collectively contributed to the observed decline in the competitiveness of the beef industry in Botswana. If these factors are not effectively addressed, Botswana’s beef industry is likely to continue to experience declining competitiveness in future,” they write.

DEMAND-SIDE FACTORS

The live cattle market in Botswana may be described as oligopsonistic, with the BMC being a price leader and a residual buyer of live cattle and numerous other buyers constituting the price-taking fringe firms (BIDPA 2006).
Given stagnant cattle supply, Seleka and Ketshabile posit that an increase in domestic demand for beef in Botswana, due to increasing per capita income, would yield a reduction in cattle sales to the BMC. Since BMC is the sole exporter of beef in Botswana, this would further yield a reduction in beef exports.


The BMC’s share of cattle sales declined from about 80 percent in 1981 to 40 percent in 2012, representing a significant loss of market share.

“If we add the share of feedlots to that of BMC, assuming they sell cattle to BMC, the share for 2012 is estimated at 43 percent. This can be contrasted from the share of local abattoirs, which rose from 9 percent in 1981 to about 40 percent in 2012. Given that BMC slaughters cattle primarily for the export market and that local abattoirs slaughter solely for the domestic market, it then follows that the rising demand for beef in Botswana.”

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Nigerians, Zimbabweans apply for Chema Chema Fund

16th April 2024

Fronting activities, where locals are used as a front for foreign-owned businesses, have been a long-standing issue in Botswana. These activities not only undermine the government’s efforts to promote local businesses but also deprive Batswana of opportunities for economic empowerment, officials say. The Ministry of Trade and Industry has warned of heavy penalties for those involved in fronting activities especially in relation to the latest popular government initiative dubbed Chema Chema.

According to the Ministry, the Industrial Development Act of 2019 clearly outlines the consequences of engaging in fronting activities. The fines of up to P50,000 for first-time offenders and P20,000 plus a two-year jail term for repeat offenders send a strong message that the government is serious about cracking down on this illegal practice. These penalties are meant to deter individuals from participating in fronting activities and to protect the integrity of local industries.

“It is disheartening to hear reports of collaboration between foreigners and locals to exploit government initiatives such as the Chema Chema Fund. This fund, administered by CEDA and LEA, is meant to support informal traders and low-income earners in Botswana. However, when fronting activities come into play, the intended beneficiaries are sidelined, and the funds are misused for personal gain.” It has been discovered that foreign nationals predominantly of Zimbabwean and Nigerian origin use unsuspecting Batswana to attempt to access the Chema Chema Fund. It is understood that they approach these Batswana under the guise of drafting business plans for them or simply coming up with ‘bankable business ideas that qualify for Chema Chema.’

Observers say the Chema Chema Fund has the potential to uplift the lives of many Batswana who are struggling to make ends meet. They argue that it is crucial that these funds are used for their intended purpose and not siphoned off through illegal activities such as fronting. The Ministry says the warning it issued serves as a reminder to all stakeholders involved in the administration of these funds to ensure transparency and accountability in their disbursement.

One local commentator said it is important to highlight the impact of fronting activities on the local economy and the livelihoods of Batswana. He said by using locals as a front for foreign-owned businesses, opportunities for local entrepreneurs are stifled, and the economic empowerment of Batswana is hindered. The Ministry’s warning of heavy penalties is a call to action for all stakeholders to work together to eliminate fronting activities and promote a level playing field for local businesses.

Meanwhile, the Ministry of Trade and Industry’s warning of heavy penalties for fronting activities is a necessary step to protect the integrity of local industries and promote economic empowerment for Batswana. “It is imperative that all stakeholders comply with regulations and work towards a transparent and accountable business environment. By upholding the law and cracking down on illegal activities, we can ensure a fair and prosperous future for all Batswana.”

 

 

 

 

 

 

 

 

 

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Merck Foundation and African First Ladies mark World Health Day 2024

15th April 2024

Merck Foundation, the philanthropic arm of Merck KGaA Germany marks “World Health Day” 2024 together with Africa’s First Ladies who are also Ambassadors of MerckFoundation “More Than a Mother” Campaign through their Scholarship and Capacity Building Program. Senator, Dr. Rasha Kelej, CEO of Merck Foundation emphasized, “At Merck Foundation, we mark World Health Day every single day of the year over the past 12 years, by building healthcare capacity and transforming patient care across Africa, Asia and beyond.

I am proud to share that Merck Foundation has provided over 1740 scholarships to aspiring young doctors from 52 countries, in 44 critical and underserved medical specialties such as Oncology, Diabetes, Preventative Cardiovascular Medicine, Endocrinology, Sexual and Reproductive Medicine, Acute Medicine, Respiratory Medicine, Embryology & Fertility specialty, Gastroenterology, Dermatology, Psychiatry, Emergency and Resuscitation Medicine, Critical Care, Pediatric Emergency Medicine, Neonatal Medicine, Advanced Surgical Practice, Pain Management, General Surgery, Clinical Microbiology and infectious diseases, Internal Medicine, Trauma & Orthopedics, Neurosurgery, Neurology, Cardiology, Stroke Medicine, Care of the Older Person, Family Medicine, Pediatrics and Child Health, Obesity & Weight Management, Women’s Health, Biotechnology in ART and many more”.

As per the available data, Africa has only 34.6% of the required doctors, nurses, and midwives. It is projected that by 2030, Africa would need additional 6.1 million doctors, nurses, and midwives*. “For Example, before the start of the Merck Foundation programs in 2012; there was not a single Oncologist, Fertility or Reproductive care specialists, Diabetologist, Respiratory or ICU specialist in many countries such as The Gambia, Liberia, Sierra Leone, Central African Republic, Guinea, Burundi, Niger, Chad, Ethiopia, Namibia among others. We are certainly creating historic legacy in Africa, and also beyond. Together with our partners like Africa’s First Ladies, Ministries of Health, Gender, Education and Communication, we are impacting the lives of people in the most disadvantaged communities in Africa and beyond.”, added Senator Dr. Kelej. Merck Foundation works closely with their Ambassadors, the African First Ladies and local partners such as; Ministries of Health, Education, Information & Communication, Gender, Academia, Research Institutions, Media and Art in building healthcare capacity and addressing health, social & economic challenges in developing countries and under-served communities. “I strongly believe that training healthcare providers and building professional healthcare capacity is the right strategy to improve access to equitable and quality at health care in Africa.

Therefore, I am happy to announce the Call for Applications for 2024 Scholarships for young doctors with special focus on female doctors for our online one-year diploma and two year master degree in 44 critical and underserved medical specialties, which includes both Online Diploma programs and On-Site Fellowship and clinical training programs. The applications are invited through the Office of our Ambassadors and long-term partners, The First Ladies of Africa and Ministry of Health of each country.” shared Dr . Kelej. “Our aim is to improve the overall health and wellbeing of people by building healthcare capacity across Africa, Asia and other developing countries. We are strongly committed to transforming patientcare landscape through our scholarships program”, concluded Senator Kelej.

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Interpol fugitive escapes from Botswana

15th April 2024

John Isaak Ndovi, a Tanzanian national embroiled in controversy and pursued under a red notice by the International Criminal Police Organization (Interpol), has mysteriously vanished, bypassing a scheduled bail hearing at the Extension 2 Magistrate Court in Gaborone. Previously apprehended by Botswana law enforcement at the Tlokweng border post several months earlier, his escape has ignited serious concerns.

Accused of pilfering assets worth in excess of P1 million, an amount translating to roughly 30,000 Omani Riyals, Ndovi has become a figure of paramount interest, especially to the authorities in the Sultanate of Oman, nestled in the far reaches of Asia.

The unsettling news of his disappearance surfaced following his failure to present himself at the Extension 2 Magistrate Court the preceding week. Speculation abounds that Ndovi may have sought refuge in South Africa in a bid to elude capture, prompting a widespread mobilization of law enforcement agencies to ascertain his current location.

In an official communiqué, Detective Senior Assistant Police Commissioner Selebatso Mokgosi of Interpol Gaborone disclosed Ndovi’s apprehension last September at the Tlokweng border, a capture made possible through the vigilant issuance of the Interpol red notice.

At 36, Ndovi is implicated in a case of alleged home invasion in Oman. Despite the non-existence of an extradition treaty between Botswana and Oman, Nomsa Moatswi, the Director of the Directorate of Public Prosecution (DPP), emphasized that the lack of formal extradition agreements does not hinder her office’s ability to entertain extradition requests. She highlighted the adoption of international cooperation norms, advocating for collaboration through the lenses of international comity and reciprocity.

Moatswi disclosed the intensified effort by law enforcement to locate Ndovi following his no-show in court, and pointed to Botswana’s track record of extraditing two international fugitives from France and Zimbabwe in the previous year as evidence of the country’s relentless pursuit of legal integrity.

When probed about the potential implications of Ndovi’s case on Botswana’s forthcoming evaluation by the Financial Action Task Force (FATF), Moatswi reserved her speculations. She acknowledged the criticality of steering clear of blacklisting, suggesting that this singular case is unlikely to feature prominently in the FATF’s assessment criteria.

 

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