Several farmers in the Ghantsi Administration District recently spent a night at the Botswana Meat Commission (BMC) offices in protest of late payment of their slaughtered cattle as the cash flow of the beef exporting commission remains in the red.
The BMC had to make a quick payout of 9 Million Pula the following day as more farmers arrived the following morning demanding payments, further, mounting the pressure.
“BMC paid out nine Million Pula in two transactions, the first was made in the morning (5 Million) and the next was made in the afternoon (4 Million) on Wednesday 24 June to assist some farmers who had requested for their pay-outs that day. Beyond this, BMC has further increased its deposits to varied accounts for farmers to cash-out their vouchers on continual basis. The latter is still ongoing,” explained the Commission’s Public Relations Manager, Brian Dioka this week in response to WeekendPost questions.
On the 22nd June farmers were expecting payments, but a week leading to the set date the Commission sent out text messages and called the affected farmers informing them that their payments will be delayed or pushed back by five days due to unforeseen circumstances that needed urgent attention. This consequently meant, payments for the week 15-19 June were pushed back by a week and therefore were to be honoured as of 22nd June onward considering who supplied first.
However on the 22nd June, no payments were seemingly coming forth and farmers were getting agitated. Several of them refused to leave the BMC offices at closing time and spent the night there.
“We were reliably informed by our Extension Officers that about seven individuals spent a night at BMC offices, and this was not all Ghantsi Farmers but some,” Dioka confirmed and added that, “unfortunately some farmers came to BMC Ghantsi Offices, even though they were not first on the line to be paid-out, this therefore required BMC to adjust its payment plan to now cater for all outstanding balances regardless of prioritising according to supply, to discourage any further inconveniences.”
BMC does not only owe Ghantsi farmers, but even farmers and suppliers in other parts of the country that supplied cattle to its three abattoirs from both the commercial holdings and field-buying. However Dioka and the current Minister of Agriculture, Patrick Ralotsia, maintain that no special dispensation was done for Gantsi farmers as the payments were an already existing plan.
“No special dispensation was made to favour Ghantsi Farmers, the Commission took a decision to address the issue of some farmers in Ghantsi who at that time seemed stranded or challenged to go back to their homes given the emergent challenges of going back home. BMC has continued with its plan from June 22nd to clear all outstanding balances, and this is currently ongoing. BMC has never failed to pay its suppliers or honour payments. The only issue here is the delay, noting the above-said. Even as we speak Farmers in other parts of the country are currently being paid on a daily basis,” Dioka further explained.
The BMC liquidity has been publicly profiled and it is a well known factor that it is still recovering. This is also largely part to the outdated current operative model, which BMC has motivated for its reforms and asked for all stakeholders to be supportive of it.
The referred operative-model is designed in such a way that BMC buys non-compliant cattle from the fields or communal areas and transfers them to feedlots for a stay of 90 days (3 months), then slaughter and sell to markets which takes about 8 week, making the total waiting period of realizing sales-proceeds for such production to be 5-6 months.
Dioka says even with knowledge of the latter, some beef cattle suppliers, requires that they be paid within 21 days or even less.
“It must be noted that while at feedlots, BMC alone foots the bill for cattle feed, occupancy, transport and other logistics, further tying-up immediate cash to honour farmers payments within the shortest possible time. This is done to get the cattle to comply with slaughter and market requirements amongst other, so in simple terms, cattle bought from communal areas (which makes about 70 percent of supply to BMC) have to wait for 3 months to be slaughtered,” Dioka contended.
However the Ghantsi South Member of Parliament, Noah Salakae is of the view that communal farmers are being exploited by the Commission because they do not have an alternative market.
“People’s cattle are taken from them because they are hopeless, they do not have any other place to sell them other than BMC. They wait up to two months and even beyond for payments. Just recently the Ghantsi farmers had to spend a night at the BMC office as a last resort and they were paid the following morning. Is this what BMC has become? Is this what it takes for people to be paid for their cattle?” Salakae rhetorically commented.
Meanwhile the Minister of Agriculture, Patrick Ralotsia is optimistic that the Commission is in the right path of recovery as its cash flow has significantly improved since the take-over of new management in 2013.
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.”