Monday, October 25, 2021

Nampak Limited breathe new life to manufacturing sector

With the prevailing state of affairs of folding businesses in Botswana, the story of Can Manufacturers and ‘Nampak DivFood Botswana’ may possibly read more positively and perhaps even appear to breathe new life to the local manufacturing base.

Can Manufacturers had reached the brink of closure owing to insolvency but its owner, Botswana Development Corporation (BDC), took to seeking a new partner in hope of salvaging the food can producing plant. It was on Thursday last week that the culmination of the search was realised through the official launch of the re-vamped plant, now called Nampak DivFood Botswana. Formally established in 2008 Can Manufacturers owed its existence to a 2002 feasibility study which BDC engaged in which had identified unmet demands for food cans in the SADC region. However, hardly a decade in existence the food can produce plant reached a point of caving in, a state that was blamed on poor performance of the plant’s activity.    

“Nampak DivFood Botswana came at the right time and saved the situation,” said the Trade Minister, Vincent Seretse, who officiated the launch.   

In the time leading to the impending closure of Can Manufacturers BDC approached Nampak Limited, a South African packaging company, to come in as its technical partner in what was deemed a turnaround strategy. BDC set about the talks in May 2016. Following a series of discussions the two parties entered into an agreement in August 2017 and by then Nampak Limited had effectively taken control of the operations, which came into force earlier in February. The resultant agreement established Nampak DivFood Botswana which is a joint venture between Nampak Limited and BDC with 74 percent and 26 percent shareholding respectively. Nampak is Africa’s largest packaging company which operates from 28 sites in South Africa, 15 sites in the rest of the continent, as well as 8 sites in the United Kingdom. The disposal of all of the equipment from Can Manufacturers to Nampak DivFood Botswana was approved by the Competition Authority in December 2016.     

“Can Manufacturing was a business that had really good equipment but perhaps was established a long distance from the market. I think it needed a little strategic thinking around which products can be sustainably produced and in what sort of area,” said Christaan Burmeister, the Group Executive Chairman of Nampak DivFood Botswana.  Instead of the can assembly Burmeister and his team opted to produce can lids, which he said is the more viable area of production given their existing South African market which is where the bulk of food processing takes place. “We could provide that link between market and what we produce,” he said. The plant will be exporting 100 percent of its production to South Africa. The plant will operate on 16 hours per day and is expected to produce a volume of 28 million lids per month.      

Despite the avoided fold, the structured plant resulted in about 78 percent loss of employment from about 60 employees to the current staff of 13 people. Burmeister said the current number can handle the anticipated volumes adding that if the market grows they could consider increasing it. “I think our priority at the moment is to run the plant properly, to make sure we get the optimal quality and productivity,” he said. Defending the employment reduction, Minister Seretse said that the point should not be missed that the revenue created and tax paid by Nampak DivFood Botswana will be used to create other jobs elsewhere. “Somewhere down the value chain more jobs would have been created,” he said. It is to that regard worth mentioning that the country, currently besieged with joblessness, could do with more certainty in the creation of jobs than the hope of them being offshoots of businesses such as Nampak DivFood Botswana.     

The CA, in approving the partnership, had foreseen that the transaction would result in citizen disempowerment. It instructed to that regard that “the end line business will not relocate out of Botswana and shall remain a manufacturing business and not change into a sole distribution business.”     

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