Thursday, July 18, 2024

Privatising BMC is a gross mistake

Batswana should stand up and speak against government’s decision to privatise Botswana Meat Commission.

BMC privatisation, if it happens will be a kind of shakedown that will by far affect subsistence farmers more than the elite cattle barons whose interests are already so well represented at parliamentary and cabinet levels.

The small farmer is being sold a false dream ÔÇô a dummy that will with time prove worthless.

Privatising BMC is an easy if incoherent strategy.

Questions must be asked; on whose behalf is government privatising BMC? Who stands to benefit from the privatization? And who will end up the poorer from such a transitional plan?

Botswana Meat Commission was created in the 1950’s and has operated pretty much optimally until recently, when Botswana Government began to lose its fight against Foot and Mouth Disease.

Department of Veterinary Services is pretty much at the coalface of failed government efforts to defeat Foot and Mouth Disease. Any victory against Foot and Mouth Disease will not come unless the Department of Veterinary Services is strengthened and overhauled. That means arming it with a strong leadership.

In the meantime, our government needs to demonstrate sensitivity to ordinary, everyday Batswana.

And privatizing BMC is in my view insensitive to the plight of many small farmers who form a majority of farmers across the country.

And of all the parastatals, BMC, is the only one that ordinary, everyday Batswana can truly relate to and with some genuine level of pride, call it theirs.

This is because BMC cattle supply is owned and dominated not by cattle barons, but by a big mass of subsistence farmers.

These are its biggest suppliers, contributing close to 85% of animal throughput.

These are the people who deserve a continued say in BMC.

And that say can only be guaranteed if government continues as both custodian and trustee.

Given how long BMC has survived as a Government entity, and also the sheer volume of ordinary people who are intimately linked to it as suppliers, transferring it into private ownership, no matter how benign the motive, makes the act nothing short of a government overreach.

For some time now, BMC has been showing signs of stress. Very little of it can be traced to ownership.

European Union has been essentially the only market. The European Union has probably the toughest food regulations in the world.

It has been hugely inept on the part of Botswana government and BMC management not to add other mix of markets given EU’s well-known stringent food regulatory rules.

With any outbreak of Foot and Mouth Disease in Botswana, the EU will stop importing meat, including from totally unaffected areas.

That by their standards is not negotiable.

If the markets were diversified, BMC would have had a better fighting chance when EU closed off Botswana beef.

Incidents of corruption and mis-management at BMC have not helped an already explosive situation.

There is absolutely nothing wrong with liberalising the meat exports.

Speaking in forked tongue by making reference to creating a Meat Board as the regulator is calculated to make the situation foggy.

Regulator can still come on line even as government remains the owner.

Quite a few Batswana are skeptical about this transition, but they are not eager to express themselves for fear of being targeted especially because many are still unsure if the current administration is really any different from the previous one that was famously vindictive, retributionist and abnormally sensitive to criticism.

BMC under-performance is symptomatic of a much deeper and pervasive inner malaise that has now morphed into a structural weakness. It has absolutely nothing to do with Government ownership of BMC.

BMC ills have got everything to do cash-flow.

They are a result of a bad business model that has been made worse by capital misallocation and underinvestment.

These have resulted in infinitely long waiting periods before farmers could be paid for the cattle supplied.

The feedlot model adopted by BMC was also bad for the business.

It consumed and burnt a lot of cash, and brought in less returns, especially if outsourced as was the case at BMC.

BMC privatisation will breed unnecessary resentment and anger among a majority of Batswana subsistence farmers who will soon enough find out that they had been sold false dreams by their own government.

The ills and challenges bedeviling BMC are structural.

BMC is under immense financial strain.

Their problems do not have much to do with ownership.

Against this backdrop BMC needs capital.

It needs a stimulus.

Recent past bailouts by Government have been piecemeal and halfhearted.

The money so lent was totally insufficient. BMC needs to be sufficiently capitalized.

Not surprisingly, some of that money went to defraying overdraughts and other financial lifeboats that BMC had secured from commercial banks.

In the end, no money, or very little went towards securing the goodwill from farmers to convince them that BMC was open for business.

If anybody wants farmers to sell their cattle to BMC they need to start paying farmers on time.

Thankfully BMC has continued its feedlot policy. It was bad and irresponsible.

The model badly over drained BMC, depleting all its financial reserves, including collapsing its defence walls thus rendering it totally unable to honour its obligations to a key stakeholder; the farmer.

No evidence, at least not plausible, has been adduced to show how a change in ownership will replenish BMC coffers or change its fortune in any grand scale.

Efforts at correcting such a situation have been equally problematic.

The wrong message that BMC privatisation is sending is that ownership by Government is a problem.

Not at all!

The beneficiaries of the said privatisation will be big farmers and their allies.

Hopes that BMC will be better because Government has shed ownership will with time be dashed.


Read this week's paper