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BMC still a factor in economic diversification – Tombale


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.

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Pula smiles at COVID-19 vaccine

25th November 2020
COVID-19 vaccine

A squeaky and glittering metaphoric smile was the look reflected from the Pula against the greenback this week and money market researchers lean this on optimism following Monday’s announcement of another Covid-19 vaccine which is said to have boosted emerging market economies.

With other emerging market currencies, the Pula too reacted to optimism and fanfare on the new Covid-19 vaccine against the weakening US dollar which has been losing its shine since the uncertainty laden US elections.

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Choppies high on JSE rollercoaster volatility

25th November 2020
CHOPPIES

After bouncing back into the Johannesburg Stock Exchange (JSE) last week Friday, following a year of being in the freezer, the Choppies stock started this week with much fluidity.

Choppies was suspended in both the Botswana Stock Exchange and its secondary listing at the JSE for failure to publish financial results. Choppies suspension on Botswana Stock Exchange was lifted on 27 July 2020. On Friday last week, when suspension was being lifted, Choppies explained that this came into fruition “following extensive engagement with the JSE.”

Choppies stock, prior to suspension, hit a mammoth decline in value of more than 60 percent, especially in September 2018. Waking from a 24 month freezer, last week the Choppies share price was at R0.64 and the stock did not make any movement.

However, Monday was the day when Choppies stock moved vibrantly, albeit volatile. Choppies’ value was on a high volatile mood on Monday, reaching highs of 200 percent. At noon, the same Monday, the Choppies share had reached R1.05. Before taking an uphill movement, Choppies stock slightly slipped by 2 cents. But the Choppies share rode up high and by lunch time the stock had reached the day’s summit of R2.00 and that was at 13:30 when investors were buying the stock for lunch.

The same eventful Monday saw gloom on the faces of Choppies rivals, when Choppies gained by 220.31 percent around lunch time its rivals in the JSE Food & Drug Retailers sector were licking wounds. Spar lost 2.94 percent, Pick Pay fell by 2.43 percent, Shoprite 7.52 percent and Dis-Chem 1.98 percent. The only gainer was Clicks by a paltry 0.51 percent.

In an interview with BusinessPost, Choppies sponsors at the JSE PSG Capital Managing Director Johan Holtzhausen explained that the retailer’s stock was in high demand after a long suspension. He said when a company list or a suspension is lifted the market needs to find itself on the pricing of the share.

“Initially when the suspension was lifted there were more buyers than sellers. As far as we could see this created a shortage of shares so to speak and resulted in the price at which the shares traded going to R1.20 and eventually R2.05 before finding its level around R0.80 sent from a JSE perspective.

This is marked dynamics and reflect that there are investors that are positive about the stock in the long run. This is a snapshot over a short period and one requires a longer period to draw further conclusions,” said Holtzhausen in an interview talking about the Choppies stock.

On Monday this week where the Choppies value grew by 200 percent, the stock took a turn looking down, closing the day at R0.87 from a high of R2.00. According to local stockbroker Motswedi Securities on Monday while there was no movement by Choppies in the local stock exchange as the retailer appeared on the board as 141,000 shares traded at P0.60 each.

However in Choppies’ secondary listing the stock price rallied to over 200 percent during intraday trading on Monday before losing steam and declining to around R0.87 share.

Before press yesterday Choppies opened the market with the stock starting the day at R0.80 then went flat for few hours before taking a slide downward, dropping 5 cents in 30 minutes. Choppies then went flat at R0.75 for 50 minutes yesterday before going up at 10:20 am where it nearly recovered the open day price of 80 cents, but was shy of 1 cent. From 79 cents the price went flat until noon.

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Foschini-Jet merger, a class and rivalry conundrum dissection

25th November 2020
Foschini

Competition and Consumer Authority (CCA) has revealed that in its assessment of the Jet take over by Foschini, there were considerations on possible market rivalry and a clash in targeted classes.

According to a merger decision notice seen by this publication this week, high considerations were made to ensure that Foschini’s takeover of Jet is not anyhow an elimination of rivalry or competition or if the two entities; the targeted and the acquiring enterprise serves the same class of customers or offer the same products, to elude the anti-trust issues or a stretch of monopoly.

The two entities are South African retailers whose services stretched to Botswana shores.  Last month local anti-trust body, CCA, received an acquisition proposal from South African clothing retailer, Foschini, stating their intentions to take-over Jet.

South African government’s Business Rescue Practitioners earlier this year after finding out that Jet’s mother company, Edcon, is falling apart, made a decision that Foschini can buy Jet for R480 million. This means that Foschini will add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents.

However the main headache for the CCA decision which was released this week, is distinguishing the targeted and the acquiring entity businesses and services.

When doing a ‘Competitive Analysis and Public Interest’ assessment, CCA is said to have discovered that Foschini is classified as a “standard retailer” which targets middle-to-upper income consumers and it competes with stores such as; Truworths and Woolworths. The targeted entity, Jet, is on the lower league when compared to its acquirer, it serves customers of lower classes and is regarded as a discount/value retailer targeting lower income consumers or a mass market. This makes Jet to be in direct competition with Ackermans, Pepkor, Cash Bazaar and Mr Price.

“Therefore, a narrower view of the market is that Foschini through its stores trading in Botswana is not a close competitor to Jet. Additionally, there exist other major rivals who will continue to exercise competitive constraints on the merged enterprise post-merger,” concluded CCA this month.

The anti-trust body continued to explain that in terms of the Acquisition of a Dominant Position, the analysis shows that the acquisition of the target business by Foschini Botswana will result in an insignificant combined market share in the relevant market.

This made CCA reach to a conclusion that there is no case of an acquisition of a dominant position in the market under consideration or any other market on the account of the proposed transaction.

What supports the merger according to CCA is that it is in compliance with regards to ‘Public Interest Considerations’ because the findings of the assessment revealed that the transaction is as a result of the need for a Business Rescue by the target enterprise. This is so because in the event that the proposed transaction fails, it will translate into the loss of the employment positions at the target business.

“On that note the Authority (CCA) found it necessary to ensure that the proposed merger does not result in any retrenchments or redundancies. In light of this, the assessment revealed the critical need to protect the employees of the merged entity from possible merger specific retrenchments/ redundancies,” said CCA.

Before making a determination that the recently proposed transaction is not likely to result in the prevention or substantial lessening of competition or endanger the continuity of the services offered in the relevant market, CCA said it then moved into a concern for public interest which is a protection enshrined in the Competition Act of 2018.

CCA’s concern was mostly loss of livelihood or employment by 126 Batswana workers at Jet stores, stating that possible retrenchments or redundancies may arise as a result of implementation of the proposed merger.

Much to the desire of trade union or labour movements in Botswana and across Southern Africa where the Jet stores are stemmed-who also raised concerns about the retail’s workers job security- CCA subjects Foschini to keep the target entity 126 workers.

“There shall be no merger specific retrenchments or redundancies that may affect the employees of the merged enterprises. For clarity, merger specific retrenchments or redundancies do not include (the list is not exhaustive): i. voluntary retrenchment and/or voluntary separation arrangements; ii. Voluntary early retirement packages; iii. Unreasonable refusals to be redeployed; iv. Resignations or retirements in the ordinary course of business; v. retrenchments lawfully effected for operational requirements unrelated to the Merger; and vi. Terminations in the ordinary course of business, including but not limited to, dismissals as a result of misconduct or poor performance,” said CCA.

CCA also orders that Foschini informs it about all the details of 126 Jet employees within thirty (30) days of the merger approval date. CCA should also know information of when Foschini is implementing the merger, within 30 days of the approval date.

Other conditions include Foschini sharing a copy of the conditions of approval to all employees of the Jet or their respective representatives within ten (10) days of the approval date.

“Should vacancies arise in the target, the merged enterprise shall consider previous employment at one of the non-transferring Jet stores to be a positive factor to be taken into account in the consideration of offering potential employment,” said CCA.

According to CCA, in cases of any job losses, for the Authority to assess whether the retrenchments or redundancies are merger specific, at least three months before (to the extent that this deadline can be practically achieved and in terms of the prevailing and legally required employment practices) any retrenchments or redundancies are to take place, inform the Authority of:  i. The intended retrenchments; ii. The reasons for the retrenchments; iii. The number and categories of employees affected; iv. The expected date of the retrenchments.

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