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Job losses loom large

Botswana Power Corporation (BPC) intends to retrench, CEO Jacob Raleru

The Ministry of Labour and Home Affairs has informed President Lt Gen Ian Khama that 55 companies have submitted notifications of intent to restructure which might lead to retrenchment of employees during the next quarter, as required by the Employment Act.

This comes in the wake of further job losses reported by other companies including Kgalagadi Breweries this month. KBL retrenched 88 employees at its Lobatse plant.  Information on possible retrenchments surfaced at President Khama’s briefing by the Ministry last week.

According to Pearl Matome, Permanent Secretary in the Ministry of Labour and Home Affairs, fourteen companies retrenched a total of 297 employees between March and June 2015. The sector that has had the highest number of retrenched employees is the diamond polishing industry. Zebra Diamond and Leo Schechter Botswana retrenched a total of 82 employees between them.

Notifications of intentions to restructure and retrench came from companies including – Botswana Power Corporation (BPC); Botswana Housing Corporation (BHC); Diamond Trading Company Botswana (DTCB); Botswana Investment and Trade Centre (BITC); Botswana Public Officers Pension Fund (BPOPF); and the Directorate of Public Service Management (DPSM), among others.

Matome has also revealed that the Employers’ Organisations Act is being reviewed with particular attention to dismissal process of non performing employees as there is an impression by employers that the process is long and therefore compromises productivity. She pointed out that the current laws were inherited from the pre-independence era and seem to be undermining productivity.

BPC going through transformation

A decision by the Botswana Power Corporation is currently subject to a Management Contract for a period of three years to enable the Corporation to achieve performance turnaround and organisational transformation.

This is said to have influenced the decision to restructure.

The decision was taken pursuant to a Business Operations Review consultancy that was carried out on BPC by an energy consultancy firm based in Ireland, ESB International Limited in 2013.

 A change process for BPC is envisaged that was largely brought about by the Corporation’s transformation from a retailer of power to an electricity generator with a higher asset base due to increased generation and transmission infrastructure.

“It is imperative that BPC be transformed from its current operating status to a financially viable power utility and  a BPC 2018 end state strategy has been developed to achieve this,” read an earlier statement by the BPC.

This is seen as an opportune time for the project given the following developments in the Botswana electricity industry; The external expertise will assist BPC to ready itself for competition in the electricity industry in line with Government’s decision to open up the market to independent power producers; With the imminent setting up of an electricity regulator, BPC will also be assisted to prepare itself to operate within a regulated environment.

The Management Contract service provider took over the operations of Botswana Power Corporation for a three year period to facilitate the transformation. The management and staff of BPC are participating in the transformation process with a view to leading the transformed organisation at the end of the contract period. It is expected that at the end of the three year Management Contract the service provider will deliver a transformed BPC in line with the agreed performance indicators.

DTC Botswana goes for efficiency

Diamond Trading Company Botswana (DTC Botswana) is a 50/50 Joint Venture partnership between the Government of the Republic of Botswana and De Beers. DTC Botswana sorts and values Debswana Diamond Company’s rough diamond production.

Debswana Diamond Company (Pty) Ltd is a 50/50 Joint Venture partnership between the Government of the Republic of Botswana and De Beers. DTCB could be embarking on a restructuring process because of market pressures and the need to optimise its operations.

BITC wants a lean organisation

BITC is mandated to promote export led investment and seek export markets for Botswana products. The parastatal has been operating amidst a still, subdued global economy that is likely to continue for the foreseeable future.

However, despite the economic gloom, BITC believes that Botswana remains an attractive destination for investment not only in terms of the growing size of an increasingly affluent consumer base, but also taking into account the returns that investors have been able to achieve in Africa over the years.

BITC has a complex organisational structure, its possible re-organisation may phase out some positions, and there is little suggestion that there will be new posts created. Sources say the BITC may be looking at making the organisation leaner while still executing its mandate efficiently.   
DPSM may phase out posts

Government’s employing organ, the Directorate of Public Service Management has also notified the Ministry of Labour and Home Affairs of its intentions to restructure which may lead to retrenchments. This is despite the fact that government currently has over 10 000 vacancies.

The Minister of Finance and Development Planning has on a number of occasions indicated that government is going leaner and was looking at lowering the wage bill. There is generally a freeze of recruitment within government and most government departments are working towards having streamlined organisational structures. DPSM is likely to lead the way in trimming down staff numbers.

BHC has notified Government  

“The signs of recovery from the global financial crisis are creeping in at a slow pace and Botswana is not an exception. The local GDP is expected to grow by 5.9% during 2014. The growth is driven by the recovery in the mining sector, especially diamonds. The contribution of mining to GDP is still much less than the pre-2008 levels. This slow recovery has had a negative impact on the Botswana Housing Corporation as Government scaled down on new construction projects, leading to low activity in the construction and infrastructure sector. The prospective BHC customers were also affected as they struggled to afford the houses. In some cases, prospective customers prioritised other basic necessities like food and clothing over home ownership. It is evident that the BHC customers have not benefited from the low interest rates currently prevailing in the market due to issues of affordability of our houses,” wrote BHC chairperson in her report in the BHC 2014 annual report.

BHC as a parastatal is not doing badly. Their balance sheet looks healthy despite reduced economic activity which is acknowledged by the chairperson. It is evident that they may be going through a phase where they need to realign their workforce and slot them into a new structure that will promote efficiency. Observers are not expecting a full scale retrenchment but rather restructuring.
Government Austerity program  

When a government tightens its belt in tough economic times the entire nation feels the squeeze. With less money to pay for the full spectrum of government services because of declining tax revenues and increasing debt, deep cuts in expenditures would seem inevitable. Minister Kenneth Matambo has already alluded to the fact that government will have to make cuts in spending. He was emphatic on the need to reduce the government workforce among other things.  

At its simplest, an austerity program, usually enacted by legislation, may include one or more of the following:

A cut, or a freeze without raises, of government salaries and benefits.

A freeze on government hiring and layoffs of government workers.

A reduction or elimination of government services, temporarily or permanently.

Government expenditures may cut. Previously planned government spending programs – infrastructure construction and repair, healthcare and veterans' benefits, for example – may be cut, suspended or abandoned.

An increase in taxes, including income, corporate, property, sales and capital gains taxes.

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Government sitting on 4 400 vacant posts

14th September 2020
(DPSM) Director Goitseone Naledi Mosalakatane

Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.

Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.

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FNBB projects deeper 50 basis point cut for Q4 2020

14th September 2020
Steven Bogatsu

Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.

The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter.  According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.

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Food suppliers give Gov’t headache – report

14th September 2020
Food suppliers give Gov’t headache

An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.

Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.

There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.

The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.

Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.

In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.

“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.

In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.

“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”

Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.

In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.

In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.

This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.

In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.

Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.

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