Friday, June 21, 2024

Govt backs BMC on FNBB loan

The government will act as a guarantor to a P300 million credit facility obtained by Botswana Meat Commission (BMC) from First National Bank Botswana.

Finance Minister Peggy Serame this week presented to parliament a request to extend a government guarantee to BMC as part of support for the state owned meat entity to borrow from the financial markets in order to finance its growth strategy.

“BMC is considered a strategic asset whose revival could greatly benefit the agricultural sector and the beef market in particular,” said Serame when seeking approval from legislators.

BMC has been facing acute operational and financial problems over the years. In July, BMC approached government with a request for financial assistance to undertake reforms through its Meriting Strategy. The financial support was approved through a presidential directive in August, which included the extension of a P120 million loan to BMC.

Last year, BMC was one of the state owned enterprises flagged by Botswana Accountancy Oversight Authority (BAOA) for lack of financial reporting compliance. BAOA noted that the financial sustainability of the company remains uncertain, complicated by significant accumulated losses.

The audited financial position as at the end of 2019 showed an accumulated losses of P1.2 billion and made a loss of P106 million for the year ended 31 December 2019. As of financial year 2019/2020, BMC owes government P248 million.

As government intensifies efforts to save BMC, President Mokgweetsi Masisi during the state of the nation address last month said the administration was in the process of establishing the Meat Industry Regulatory Authority (MIRA), which will go through parliament for approval.

“The Meat Industry Regulatory Authority will, amongst others, enhance competition in the meat sector through licensing of abattoirs, managing animal traceability, and promoting the marketing of livestock and by-products,” Masisi said.

Furthermore, the president said the export of live cattle is expected to continue for the next two years, subject to periodic reviews. Since the decision to allow producers to export live cattle, bypassing the monopoly of BMC, more than 205 000 cattle have been sold to some neighbouring countries. The decision was meant to relieve farmers of cash-flow challenges at a time BMC was struggling to meet obligations. As part of government efforts to revitalize the beef industry, three private abattoirs have been facilitated to export beef and beef by-products to international markets, a move that will increase opportunities in the beef sector, the president said.

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