banner_9.jpg
banner_274.jpg
Home » News » Business » BMC monopoly comes to an end

BMC monopoly comes to an end

Publishing Date : 12 March, 2018

Author : ALFRED MASOKOLA

The Botswana Meat Commission (BMC) monopoly which has been in place since pre-independence era is coming to end following a decision by cabinet to approve several reforms in the country’s beef sector.


Cabinet recently finally agreed to reform Botswana’s beef sector following calls by farmers in the past few years to allow more players in the sector. The interesting part of the reforms will be the introduction of the beef regulator. “This will go in a long way as a decision help the small farmers, since 80 percent of beef producers are small farmers,” announced the ruling party’s deputy secretary general Shaw Kgathi in a press briefing this week.


In a deal that is yet to be concluded, owing to consultation that will ensue, cabinet has resolved that BMC, will transform from being a corporation to a limited company. Government is to retain 50 percent of BMC stock, while the other 50 percent goes to farmers, Kgathi revealed.
The two other abattoirs owned by BMC, the Francistown and Lobatse abattoirs will be privatised, and cease to be part of the BMC.


BMC has been protected from export competition, with several privately owned and local council abattoirs, as well as a large number of local butcheries that undertake slaughter having been restricted to supply only the domestic market. BMC Act gave BMC a monopoly over the export of beef and related products and also prohibited the export of live cattle. The EU quota – which is specific to Botswana – also means that the BMC always faced little or no competition in the EU from other beef exporting countries. Despite the monopoly and all these privileges, the BMC continued to experience both administration and efficiency problems.


BMC MONOPOLY AND ITS INEFFICIENCIES


 In 2012, parliament resolved to establish a parliamentary select committee following a motion by then Kanye North MP, Kentse Rammidi requesting Parliament to establish a special parliamentary committee to investigate the country’s declining beef industry. The committee which consisted of eight legislators had found that BMC CEOs, with few exceptions, have been chosen from the ranks of retired civil servants not based on merit or their commercial experience.


The MPs had also pointed out that the BMC management practiced poor governance and there were bad relations between the board and management. It discovered productions inefficiencies caused by over staffing, declining productivity, and high marketing costs.
There was no proper and efficient system of financial controls. The BMC became financially insolvent over the 2009-2012 period.


The Parliamentary Select Committee at the time picked on the issue of BMC marketing, pointing out that “At present BMC’s marketing agent, Global Protein Solutions (GPS) provides for a legal monopoly on exports. The BMC should seek to revise the contract and segments of the global beef export market to hedge against a monopoly of the marketing of the Botswana beef produce.”


Interestingly the Committee also declared that an investigation be undertaken by the Directorate on Corruption and economic Crime (DCEC) into the award of the marketing contract by BMC in favour of GPS and consideration be made for a review and renegotiation of the contract terms to ensure residual contract of the beef export marketing by the BMC. The Committee also discovered a “strong circumstantial evidence of under-pricing of beef to the EU, South Africa, and domestic markets over the period. The recommendations by the committee were never considered.


The Parliamentary Select Committee also decided that Feedlot activities should be undertaken by the Botswana private sector and not by the BMC
In 2016 Feedlotters Association of Botswana said in a scathing ‘confidential’ report channelled to the Minister of Agriculture and Food Resources, Patrick Ralotsia, expressing shock at the establishment’s attempt to wish BMC problems and alleged corruption away by pushing numerous damning reports under the carpet.


The report titled ‘Overview of BMC 2013-2016’ was uncompromising in detailing how some executives at BMC in cohort with some third parties are ensuring that the BMC is seen as an unprofitable venture. The Feedlotters were of the view that there was a deliberate move to ensure that the BMC remains unprofitable and does not identify new markets.


In their explosive report, they write: The recent “Shambles” that bedevilled the BMC resulting in the institution of two state Commissions of inquiries to investigate the wrongs of the BMC itself does not seem to have solved anything at BMC. They had no kind words for the management of the BMC; they alleging that it was the worst in many years.


“If managed properly, BMC is a sustainable business that can go far in empowering and enriching communal farmers in Botswana. The country as a whole is being deprived of the values and sustainable incomes that could be available through a thriving cattle industry, under the leadership of a viable and profitable BMC,” the Feedlotters write in their report.


BEGINNING OF THE END OF BMC MONOPOLY

In 2016, when appearing before the Parliamentary Committee of Statutory Bodies and Enterprises BMC Chief Executive Officer, Dr Akolang Tombale revealed that the beef industry could now be looking forward to the end of the commission’s monopoly and other entities to come on board.


This was despite the fact that only a year earlier he had rejected the idea in totality before the same committee. Tombale had told the committee in 2015 that the BMC monopoly was not the reason the entity was beleaguered by financial crisis.
Tombale however made a u-turn and informed the committee that he had shared with government and that he is committed to end BMC monopoly. Tombale said the end of BMC monopoly will require establishment of a meat regulator to ensure that quality of the meat remain high.


Tombale further told the committee that the Maun and Francistown abattoirs remain a “social responsibility case” and they may be privatised to transform the beef industry. He was optimistic that the Lobatse plant remains the core of BMC business and could be easily returned to profitability without the other two abattoirs.


Tombale said prior to approaching the ministry over privatisation, they had satisfied themselves that with establishment of meat regulator, they would be no negative impact brought about by liberalisation of beef industry in Botswana. The BMC CEO had said the liberalisation of beef industry in Botswana did not necessarily mean immediate success for the industry since Botswana remain a small player in the beef market. Tombale said what the BMC have done was to focus on the niche market and benchmarked against Namibia which is producing the same amount of beef with Botswana.


Government has been resisting calls by farmers to liberalise the beef industry. Since independence government, through BMC have been the only entity authorised to run an abattoir that export the beef to other countries. The idea of liberalisation of BMC came about in 2013, when Ghanzi Farmers Association garnered support at Otse Meeting of farmers associations, resulting in the Letsema Resolution, wanting government to bring to an end BMC monopoly.

Cartoon

Polls

Do you think the closure of BCL will compel SPEDU to double their efforts in creating job opportunities in the Selibe Phikwe?

banner_14.jpg
banner_12.jpg

POPULER BRANDS