Monday, October 25, 2021

Once more, BMC’s controversial relationship with GPS under scrutiny

For now at least, the Ministry of Agricultural Development and Food Security has successfully sidestepped a question about the nature of the business relationship between the Botswana Meat Commission and a United Kingdom-based marketing company.

“There are reports that BMC has a business relationship with a certain marketing company called Food Group. This company is paid tonnes of money and its relationship with BMC is said to be detrimental to the very commercial existence of BMC itself,” said Francistown West MP, Ignatius Moswaane in parliament. “How true are those reports? It also appears the two parties have signed a contract that neither party can easily get out of.”

While terming the question as “very important”, Dr. Alfred Madigele, who was standing in for the Minister of Agricultural Development and Food Security, deferred the response to a later date when Moswaane would bring a substantive question.

The full name of the company in question is GPS Food Group and its relationship with BMC is a source of consternation to many. At the height of its turmoil in 2012, BMC outsourced the sales, management, planning and marketing of all its products in Europe to the Sussex-based company. This turmoil would prompt an investigation by a parliamentary committee which, in its report, recommended that the Directorate on Corruption and Economic Crime should investigate GPS’ deal with BMC and that the contractual terms should be reworked to hive off some of the beef export marketing to the Commission itself. 

A beef value chain analysis action plan that was developed under the framework of the Private Sector Development Programme (PSDP) also shows how unhealthy the BMC-GPS relationship is. After it engaged GPS to do its marketing, BMC was left without a marketing function and one of the results is that the Commission has neither in-house expertise in market intelligence nor access to meaningful independent export market intelligence.

“The overreliance on GPS is restricting BMC to directly access market data. All information related to market trends and specific consumer requirements are channelled via GPS,” the PSDP report says.

As unhappy about the BMC-GPS relationship are members of the Feedlotters Association who, in a report that they submitted to the ministry last year, state that the Chief Financial Officer is the only BMC official who knows the basis and operational nature of the GPS contract.

Citizens who have constituted themselves into the Botswana Meat Traders and Processors Association want to upset the apple cart. BMC proposes to reconfigure its current value chain by selling 49 percent of its shareholding in Lobatse abattoir to a private company, leasing all of its Francistown abattoir to a private company and retaining full control of the Maun one. On the other hand, its business relationship with GPS remains unchanged. The Association’s assessment is that this model doesn’t solve the monopoly problem because it merely replaces state monopoly with private monopoly. In terms of its own proposal, the players in the value chain will have several ownership arrangements which include public private partnerships as well as slaughter space allocation. As regards the marketing, instead of one company (GPS) selling the Botswana beef, this model proposes more marketing companies that will serve five niche market abattoirs. This would effectively end the GPS monopoly. The parliamentary report also raised concern about GPS’ monopoly and recommended that BMC should end this monopoly. BMC has not heeded such advice.

The latter, as other unexplained aspects of this relationship has raised deeply troubling questions about who is behind GPS. Good sources point fingers at some very powerful political entrepreneurs in the government system. Sources with intimate knowledge of BMC’s operational processes say that the toxicity of this relationship is such that whenever the government disburses millions of pula to bailout BMC, GPS benefits handsomely. Getting parliament to approve such bailouts is not a problem because ruling party MPs, who are the majority, are basically instructed how to vote by the parliamentary party. The political forces in question also have the power to thwart any DCEC investigation into the BMC-GPS relationship.

In the final analysis, the intrigue behind this relationship – and BMC’s lack of profitability, literally come at great cost to small cattle farmers, some of whom are wholly dependent on cattle for their livelihood.

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