The collapse of Botswana’s mining industry has adversely affected the operations and profitability of one of Associated Fund Administrators’ flagships, Pula Medical Aid Fund.
This emerged at a breakfast meeting hosted by Pula for its customers in Francistown on Friday. Operations Manager Rose Tatedi said at the meeting that 67% of Pula Medical Aid Fund’s customers are drawn directly from the mining industry. “It therefore follows that the global credit crunch, which has adversely affected the mining industry, will also adversely affect our operations,” she said.
She revealed that management has therefore found it imperative to diversify and broaden their membership base to include other sectors of the economy so as to mitigate against the debilitating effects of the collapse of the mining sector.
The global credit crunch has resulted in a number of Botswana’s mines closing down or retrenching. The mining sector accounts for over 50 percent of the GDP and over 70 percent of the country’s exports.
Last week Friday Tati Nickel released a memo urging its employees to opt for voluntary exit packages as the company tries to duck-out of a full-blown impact of the global economic crunch.
Some of Tati Nickel’s sister operations, BCL and Botswana Metal Refineries, have also felt the bite of the credit crunch. Botswana Metal Refinery recently embarked on a retrenchment exercises that saw all of its 300 employees, save 23 of them, being retrenched. The move comes at a time when metal prices, which were in the past bolstered by the Chinese demand, plummeted down to as little 70 percent since the global economic crisis started to spill-over to Botswana.
Botswana’s biggest cash cow, Debswana, has also shut-down all its four mines for two months, while Orapa Number 2 Plant and Damtshaa mines will remain closed for the entire year.
Other operations like DamonEx and African Copper have also shelved due to the credit crunch. African Copper’s Mowana Mine was recently placed on care and maintenance pending the finalization of negotiations to raise US$15 million (P120m) to help keep the company afloat.
The recent large scale retrenchments in the mining sector have greatly reduced Pula medical aid’s membership base. While some companies like Debswana have found ways to perpetuate membership of some retrenched employees until such a time that the credit crunch wanes, a majority of mining employees have found themselves without medical cover as soon as their employment with Pula’s customer groups ceased.
“Our clients can only make claims after they have made contributions. It therefore follows that once a customer ceases to make a contribution, they can also not make a claim with us” said AFA Managing director Kabelo Ebineng.
But Pula Medical Aid’s efforts to diversify and broaden its client base may also be hampered by the fact it only caters for group members and not for individual; members.
Ebineng maintains that unscrupulous individual members who disappeared after making hefty claims have in the past disadvantaged the fund. He however said that the issue of individual membership has once again resurfaced and is still being addressed at management level.
