Botswana Meat Commission (BMC) is still a sound alternative to diversify the Botswana economy, the BMC Chief Executive Officer Dr Akolang Tombale revealed.
Having gone through a turbulent period which saw the parastatal making serious loses, export beef quality issues, envisaged privatization, monopoly issues and feedlots problems inter alia, Tombale who was roped in as ‘Mr fix it’ of BMC problems is upbeat that the Commission is now taking the right course.
Tombale says the realization of such can be traced to the Commission’s 2013 annual report in where it recorded a second turnover of over 1 Billion Pula and annual profit of 74 Million Pula from an operating loss of 224 Million Pula realized in 2012. BMC sustained the same vigour in 2014 reaching an annual throughput of 144,083 cattle against an actual kill of 87,999 realized in 2013.
The CEO attributes the sterling performance to the sound leadership initiatives which included, but not limited to; better management of feedlots, reduction in operating costs, improving plant efficiencies and stock management. In the referenced year, BMC leadership developed a well thought-out three year strategy plan envisaged to end in 2017.
The beef sector plays an important role in the country's economy in terms of foreign exchange earnings, family incomes and employment.
The value of output from the livestock sector is estimated at about 80 percent of the total value of the agriculture and allied sectors, and this is contributed by the beef sector alone.
Tombale said BMC has taken the initiative to continually source new markets, but nothing yet too conclusive or worth sharing with the public.
BMC is currently pursuing retail-groups in Asia to assess the positives of exporting to that market. Nonetheless owing to the 3 year strategic plan, BMC is still determined to increase beef exports to current traditional markets with higher returns.
BMC still serves traditional markets in the European Union (Norway, Denmark, Holland, Belgium, UK, Germany, Italy, Finland, Portugal, Greece); Asia (Hong-Kong); Africa (Botswana, Namibia, RSA, Zimbabwe, Angola, Mozambique, Zambia) Tombale revealed that EU remains the lucrative market, citing the 2013 performance where 16 percent of the volume sold in that market resulted in 41 percent of total revenue, whilst 73.54 percent of volume sold to other markets resulted in 54 percent of total revenue.
“This is motivation for the BMC to increase volumes sold to the EU, given better pricing advantages for our products, and ultimately earn better returns to the Farmer that supplies quality cattle to the BMC,” he said.
In an effort to diversify its beef products he said BMC is currently exploring servicing new markets especially in the Middle-East and Asia to export a litany of products that is fresh beef, Ecco canned products and Beef byproducts.
“There is also consideration of increasing export volumes to recently acquired markets Angola and Zimbabwe, however long-term or even definitive commitments and contracts would need to be formalized as is arrangement with every market we trade with,” he added.
Tombale noted that for this to be possible, all stakeholders must not repose and throw caution to the wind, or even lower the guard on opportunistic elements which could reverse advances made to the EU and other markets. Increased quality output to the EU market, will ardently make Botswana beef products enter other equally rewarding markets.
A bullish Tombale highlighted that even though the BMC is still collating throughput data for the first quarter of 2015, current incomplete entries have shown Q1 2015 throughput to be at 20,117 against Q1 2014 throughput of 15,767. “The 3 year strategic plan is still a viable intervention to sustain and grow the 2013 performance, but even more set the Commission on a feasible path to recovery,” he said.
Tombale added that BMC is still determined to increase annual throughput to over 200,000 in lieu of the total cattle population count which currently sits in excess of 2 million according to data from Statistics Botswana. However this could be limited amongst many, by supply of eligible cattle for the EU and other markets.
“This therefore calls for all of us to safeguard our most priced asset, and not fold onto the state of complacency, even when we have a guaranteed market,” he said.
Meanwhile the Commission is still following-up on alternative markets to increase export demands of its products. He said implementation of items flagged for the strategic plan is still on-going and so is the continuance of the achievements made in acquiring the ‘A’ grade certificate from British Retail Consortium for both Lobatse and Francistown Plants; EU compliance certification for the Lobatse plant; and full compliance of ISO 9001 for all the 3 BMC plants.
Tombale urged farmers are urged to comply with set and agreed EU standards, improve management of their cattle, explore alternatives of improving beef quality without use of hormones and other quality pollutants, ensuring that amenities and resources are availed to curb opportunistic ailments such as Measles, Foot & Mouth Disease.
Tombale said BMC is doing all in its might, to use its latest business performance as a spur of setting the Commission on a path of recovery. We are also still convinced that we live to the expectations of our brand promise ‘Meat Perfection Defined” by rewarding compliant-cattle suppliers with best prices in the market, but also supplying quality beef to our consumer-market.
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”