Tuesday, September 26, 2023

Senye resignation linked to delayed BMC restructuring by gov’t

The decision by the Chairman of the Board of Directors Victor Senye to dump the Botswana Meat Commission (BMC) has been attributed to the government’s failure to fix long standing problems at the corporation, Sunday Standard has learnt. Senye, who tendered his resignation on Friday February 5, 2020, decided he was not going to let the ship sink on his watch. His resignation comes just under two years since he replaced Dr Thapelo Matsheka as the BMC Board Chairman in June 2019 following the latter’s decision to run for political office.

“I have enjoyed working with the BMC and I will be happy to work with them in any other capacity,” Senye told Sunday Standard on Friday but refused to discuss reasons behind his decision to quit. The resignation comes at a time when the already struggling BMC is now reeling from COVID-19 related challenges with the company now struggling to cope with operational costs such as paying wages for their over 750 employees. While the government extended a life line to private companies in the form of wage subsidies for COVID-19 relief, such assistance has not found its way to struggling parastatals like the BMC.

And while the corporation continues to struggle with wages they cannot retrench staff until the end of the State of Emergency (which has been running for almost a year). But the BMC troubles extend beyond the COVID-19 pandemic. While the corporation has over the past few years blamed shortage of supply for their poor performance the Sunday Standard has learnt the challenges relating to supply are in fact self-inflicted. Cattle owners have complained about low prices and delays in payment by the corporation.

While the corporation has enjoyed monopoly of the local beef industry for years experts have argued the BMC has been more detrimental than beneficial to the farmer.   Farmers were up in arms in early 2020 over the BMC’s failure to make payments in time. The BMC were at the time accused of owing local farmers from across the country in excess of P160 million on delayed payments. Farmers had written letters of demand through their lawyers threatening to take the corporation to court over the matter.

“We appreciate that farmers one to be paid well on time but we have challenges that make it difficult to meet those expectations. Our biggest challenge remains supply. We need to stockpile first before we sell and with the little supply of cattle that we get from farmers, it takes time. Just to paint a picture, we need at least 3000 cattle to fill up a container of fillet. However, most farmers only sell in winter,” BMC Spokesperson Brian Dioka told Sunday Standard at the time.

Interestingly it is the low prices and delayed payments that have reportedly led to the above challenges especially in relation to feed-lotters who are crucial in ensuring perennial supply of cattle. The 2019 decision by the government through Ministry of Agriculture and Food Security to grant farmers a ‘temporary’ window to export live cattle for slaughter also came as a blow to the BMC. The decision granted farmers an opportunity to sell cattle at a better price than that of the BMC, reducing the already dwindling supply even further. Experts have said the Agricultural Ministry’s approach that farmers would always patriotically sell their cattle to the BMC has worked against the commercial mandate of the corporation. The price discovery dynamic brought about by the 2019 liberalization of beef exports means the BMC will have to start paying competitive prices if they are to survive.

The only way to achieve success, experts have said, is to restructure the BMC and make it competitive. While the corporation has enjoyed local monopoly of exports particularly to Europe the BMC has failed to realise the true potential in terms of the value for its raw materials. Despite the high quality of its organic beef Botswana is not a big player in the international beef export market which is led by countries such as Argentina, Brazil, Spain, Belgium etc. As a result BMC does not have leverage to throw their weight around and dictate prices. In order to get maximum value for its products, experts have said, BMC needs to align with major beef selling agents to have a stronger voice in relation to price negotiation. The failure by the BMC, Sunday Standard has learnt, is not a reflection on the true value of the beef industry. All indications are the industry remains viable.

“The only issue is to fix the BMC and that requires a multi-faceted consultant to focus on all elements of the beef business,” experts have said. The government have been dragging their feet on the proposed privatization of the BMC which many believe will turn around the fortunes of the corporation. The Ministry of Agriculture in 2019 engaged a management consultancy company to make recommendations to improve the BMC and pave way for smooth privatisation. “We don’t want a situation whereby a company takes over the BMC in its current state only to end up in liquidation,” Permanent Secretary Jimmy Opelo told this publication following the announcement. The recommendations by the company have yet to be made public.


Read this week's paper