Wednesday, July 17, 2024

Ralotsia wants to privatise ill-conceived commercial venture

The Ministry of Agricultural Development and Natural Resources plans to divest from what European Union (EU) consultants have described as a poorly located and ill-conceived P6 million facility in Selebi Phikwe.

Called the National Processing Plant (NAPro), the latter produces tomato puree, tomato sauce, vegetable pickle, mixed vegetables and dried vegetables and was set up by the National Food Technology Research Centre.

“NAPro is presently grappling with typical challenges faced by many new food market entrants, said the Minister of Agricultural Development and Natural Resources, Patrick Ralotsia, when presenting his ministry’s 2018/19 budget estimates to parliament. “However, efforts are underway to privatise NAPro.”

EU consultants who studied Botswana’s horticultural value chain in 2015 raised concern about the viability of NAPro and in their report, don’t hold out much hope for its success.

“A key challenge for the plant will be to achieve consistently high capacity utilization and maintain break-even volumes. In addition, there has been no research on potential market for its produce,” says the value chain report which was produced on behalf of the Private Sector Development Programme that is now being superintended by Business Botswana.

The whole project planning was severely wanting from the get-go. One of the objectives behind establishing the plant was to process lower grade and unsold produce from Botswana Horticultural Market (BHM) in Gaborone that would otherwise go to waste. In one ironically tragic respect, locating the plant in Selebi Phikwe meant that unsold produce would go bad while being transported to a plant meant to process produce that would otherwise have gone to waste. The plant’s business model was such that it would also compete directly with the very same facility it was meant to have a symbiotic relationship with.

“The decision to locate the plant 400 kilometres from Gaborone will increase transport and wastage costs. Moreover, buying from BHM rather than directly from producers will potentially incur unnecessary additional costs for the plant. In addition, given the volumes needed for processing, BHM and the processing plant may become competitors for produce, rather than complementing each other,” the PSDP report says.

NAPro is managed by NFTRC in concert with the Selebi Phikwe Economic Diversification Unit (SPEDU) and the plan has always been to sell it off to investors at some point. The plant has three processing lines: for fruit (tomato puree initially, and later tomato sauces and paste); vegetable pickle (mixed vegetable, atchars and pickled onions and beetroot); and a drying line (cabbage, tomato and later spices). Assuming 60 percent of capacity, total production is expected to be 4000 tonnes per annum.

According to Ralotsia, NAPro sells its products to 35 Choppies stores, seven Sefalana Shoppers stores and general dealers around the country.


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