The former President of the Botswana Confederation of Commerce and Industry, Iqbal Ebrahim, sounded warning bells against the impending mortgage foreclosures in Francistown as mines in that area are beginning to feel the pinch of global recession.
“When the mines opened, a lot of people took mortgage loans and now they have started to retrench. The situation is going to be ugly here,” he said, adding that even if some survive the retrenchment, their property prices are going to be affected.
“We are faced with a situation where Batswana’s purchasing power is going to be seriously weakend. The only people who are going to survive this are sharks,” he added.
Two leading mines in the northern parts of the country, BCL and Tati Nickel’s off-shoot, BMR, have already laid out their plans to retrench.
BCL said it will reduce is staff compliment by 10 percent while BMR is retrenching all 200 staff compliment except 23.
Since the suspension of the BMR’s much trumpeted cutting edge technology Activox, 300 people, who were directly and indirectly linked to the project, were retrenched immediately after the announcement of the suspension of the project.
Over the past one and half weeks, top cabinet ministers were in Francistown and surrounding areas to address the people of the region, employers and paying mine visits in an attempt to show solidarity with residents and those earmarked for retrenchments. The visits by Vice President, Mompati Merafhe, Finance Minister, Baledzi Gaolathe and Daniel Kwelagobe also show how government and the ruling Botswana Democratic Party (BDP) are worried about the retrenchmentsÔÇöand implicationsÔÇö that are expected to take place just before the general election.
Most of the houses that were occupied by the BMR staff are vacant including a “village” owned by one landlord that has 48 vacant houses.
They did not spare the banks that advanced people mortgage loans and that remained exposed in the northern parts of the country.
“We all have to be honest if┬á we do really want this country to push forward. I have invested┬á a lot of money into the property market,” Moss Sesupeng, an entrepreneur in Francistown, said.
In the next┬á coming month┬á Botswana Metals┬á Refinery Company (BMR),┬áwill be retrenching┬á close to 200 people.
The move will have far reaching implications that include the banking sector and the social aspects. The problem is also complicated by the fact that the┬ácountry does not have rehabilitation centers that deal with people who have lost their income and livelihood.
The BMR scenario is┬á complicated by the┬á international base metal markets which have been subdued for some time since┬á the third┬á quarter of the year. The move is partly┬á fueled by the┬á American, Asian and European┬á financial crisis that has also weighted heavily on the diamond sector.
Rough Diamond prices slumped┬á heavily following┬á the World Diamond Council (WDC) President, Avi Paz’s appeal to reduce supply to polishers in the light of the mounting┬á debt level of the sector.
The industry is indebted to the tune of US 18 billion┬á which is ┬áenough for┬á one year supply. The appeal prompted DTC Botswana┬á to suspend┬á its sightholding for the last┬á four months. The plan was supposed to have netted the┬á country┬á US $ 370 million (about P3 billion).
All the mines in the┬á northern area have suspended hiring and are working on┬á plans to┬á complete their┬á contracts while others are thinking of┬á putting employees┬á on unpaid leaveÔÇöthat would directly affect leading mortgage banks, like the Botswana┬á Building Society (BBS) and the First National Bank of Botswana. ┬á