Tuesday, October 3, 2023

Government’s P120 million loan to BMC is a bad joke  

A decision by Botswana Government to give Botswana Meat Commission a loan of up to P120 million is a blessing and a curse at the same time.

It is a blessing because it is a reluctant admission of the fact that the shareholder has to step in to get BMC to work.

It is a curse because the money is so small that it is unlikely to inspire any confidence back to BMC.

The loan by itself serves to magnify and highlight the serious problems bedeviling BMC.

There are numerous and much more serious cash flow issues at BMC.

Sadly, P120million is so small that it does not signal the same government fully understands the scale of troubles at BMC.

The loan will not get people excited – not at BMC and certainly not among the farming community.

It is very unlikely that the P120m will allow BMC to run for anything more than two months – at most.

BMC executives would by now  be asking who among its cattle suppliers will get what share of the P120m.

BMC is collapsing under a weight of many years of mismanagement, corruption and conflict of interest much of which had politics and politicians as big players.

BMC has become a shadow of its former self.

It has lost all prestige and power it used to have.

Sadly it has also lost trust among Batswana and its customers.

We welcome the loan but find ourselves constrained in celebrating it mainly because of its size given the scale of the problem it is meant to solve.

If Botswana government wants to get BMC out of trouble it needs to first demand from the Board and Management what ideas they have to get BMC out of the woods.

Such a model, would then be backed by substantial funding most probably as a guarantee rather than a direct loan from government.

Given the scale and depth of the cash flow crisis, it is unlikely that BMC would anything less than P1.2 billion.

Everybody knows the true state of the country’s public finances.

There are too many demanding priorities happening at a time of economic weaknesses that include a cost of living crisis.

But, like we have pointed out again and again, BMC is too important to fail.

Every small cattle farmer in the country relies very heavily on a BMC that is financially sound.

For BMC to compete, it needs to start paying farmers the moment they drop cattle at the abattoir.

To compete BMC has to pay faster and better.

BMC is under stress and has effectively been for a long time.

As a consequence it has had to close down some of its abattoirs.

The loan is too small and lacks ambition.

In all likelihood, even the minister herself does not believe that the loan will achieve much.

It will not allow BMC leadership enough space and enough room to implement changes that are necessary in the commission’s business model.

If Government is not able to lend BMC real money, it is difficult to see if they really have their priorities right.

For any administration, for as long as a majority of Batswana are subsistence cattle farmers, BMC should be the top most priority.

For that reason we urge Botswana Government to significantly increase its assistance to BMC to get the commission back on its feet.

Like many Batswana, our biggest fear is the collapse of BMC.

We are of the view that a policy of live cattle export over the last few years was ill advised as it empowered private feedlots, many of which have direct ties to the political elite.

It literally broke down the BMC spine.


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