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One step forward, one step back for BMC

Chief Executive of BMC, Dr Akolang Tombale

The Botswana Meat Commission this week welcomed much needed relief in the form of P300 million to restructure its balance sheet, changing the gearing of the Company.

On Monday this week, parliament approved supplementary funds sought by Finance Minister Kenneth Matambo, to increase the Total Annual Provision of the Botswana Meat Commission by P300 million.

“The funds are required to finance the Commission’s operational losses for the current financial year which have put pressure on the Commission’s cash flows,” said Matambo to Parliament this week.

Matambo said that the move to give funds to BMC would only be to move funds that were approved for the now delayed Zambezi Field Services sub project as well as under spending in the ISPAAD programme due to drought.

However, the funds fall far short of addressing the Commission’s P800 million debt that has accumulated in years that it was not profitable.

The Commission’s debt earlier in 2015, stood at P769 million in loans, the major portion having been the P569 million circumvented to it during the 18 month EU delisting period of from 2011, when there was virtually no production. A P125 million loan was also sourced from First National Bank for the upgrading of the Francistown abattoir as well as a P50 million loan from P50 million from BancABC to resuscitate the Maun plant.

The Commission pays P45 million yearly in interest charges for loans taken from First National Bank Botswana and P7,6 million to BancABC, bringing both capital and interest repayments to P86 million a year.

In an exclusive interview with BusinessPost this week, the chief executive of BMC, Dr Akolang Tombale, said this was only the first part in the recapitalisation of the Commission which has since shed its mismanagement issues of yesteryears and has gone back to profitability. But the debts that the company has accumulated need to be serviced and especially the private finance houses are putting cash flow pressures on the commission.

Tombale said this, coupled with the long cash cycle that the Commission is saddled with. “It takes an average of 131 days to put cattle into the market, selling to entities that do not pay upfront.”

“Our balance sheet needed restructuring; when we take out loans, we are considered risky because of the debt that we have and that makes interest rates offered to go high.”

“We have been saying to Government that we have to recapitalise the Commission; some would call it a bailout but it is not like that; recapitalisation is nothing foreign and it has been before if you remember Debswana some years back, But it should be done in a way that it does not have to be recapitalised again after that,”

“The next step is now for Government to make a decision on which direction the Commission takes; I am not necessarily talking about privatisation but there is a need for new equity; then we can see about refurbishing the Lobatse plant,” said Dr Tombale.

Tombale said that an advisory body is currently consolidating all views to restructuring of the Commission and these will be duly presented to Government. “Operationally we are among the best on the continent though,” he said.

He said that it is likely that farmers will own the Commission in a cooperative format, such as that used by MeatCo of Namibia, whereby farmers own a stake and the government remains with a minority stake. “This is another move that will put the responsibility of the beef value chain on the farmers,” said Tombale.  

“We need to see change in how we do cattle business; currently, most people sell their cattle when there is an emergency and that should stop; we should be more commercial minded.”

In June this year, the BMC introduced some incentives for farmers to go commercial by increasing prices per kilogram of grade prime to Grade 2 by 5 percent, and Grade 3 cattle by 10 percent, as well as the introduction of an incentive ranging from 30 thebe to 70 thebe per kilogram for farmers that honour arrangements to bring specified numbers of head at specified dates.

Brian Dioka, BMC spokesperson, said that it is too early to assess the effectiveness of the new initiative, saying a review will be done in October.  


Dr Akolang Tombale is despondent after outbreak of Foot and Mouth Disease, which was announced last week. While the Ngamiland area has for many years been plagued by outbreaks of disease, cattle from Hainavelt had always been disease free hence they were enjoying a stable market in Zimbabwe.

Tombale said that while beef from Ngamiland was fetching low prices because of the lower value markets that is sold to, there was growing enquiries for beef.

He revealed that in June and July alone, 60 tons of beef were exported to Albania, but the outbreak of FMD in the Hainevelt reverses all this and all other positives garnered in the effort to make Ngamiland beef farming viable.

This comes in the wake of an announcement recently that Maun abattoir would be closed temporarily to pave way for upgrading of the plant and that an arrangement had been made to sell cattle from Hainavelt farms to Francistown abattoir. Agriculture minister Patrick Ralotsia, last week said that government spends P20 million annually to contain FMD in the Ngamiland area, but the debilitating outbreaks still continue due to breaching of fences that separate livestock from wildlife.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

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.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

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.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

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”

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