Thursday, February 25, 2021

The life of KBL remains in Government’s hands

A decision by Botswana Government to impose heavy levies on alcohol a little over a decade ago inadvertently led to KBL managers becoming semi-political operators.

That was because levies demanded an ability on managers at Kgalagadi Breweries limited to have one eye on the sales and another on the politics.

It was not a role KBL managers gladly embraced.

The heavy levies by former President Ian Khama were a source of exasperation for both the alcohol consumers and alcohol sellers alike.

If the current Managing Director had thought that was now history, recent events must have given him a rude awakening.

Brenno Kliger Diaz finds himself at the center of the Covid-19 firestorm sweeping across Botswana.

Running KBL, one of the country’s biggest companies has also led him to realise that he is never too far away from the country’s politics.

For him it is a proximity he would rather do without.

In response to a surge in Covid-19 cases, Botswana government responded by among other things issuing a ban on alcohol sale and consumption.

For KBL the impact was immediate and drastic.

Kliger Diaz is not able to put in numbers what the impact has been because Sechaba which owns KBL is currently under a closed season. The stock exchange regulations effectively preclude management from publicly discussing performance of the company during that time.

Last week KBL released a statement effectively announcing that they are moving towards suspending their operations. The statement offered a glimmer of events unfolding behind the scenes.

After Government announced alcohol ban on January 4th, KBL tried to keep the people working.

After sometime workers at Chibuku, which is an opaque beer wing were the first to be sent home.

This, according to KBL is because Chibuku expires after four to five days.

“We sent them home to reduce costs but also to reduce their risk to exposure of Covid-19,” says Kliger Diaz.

For some time KBL kept production of clear beer running, until quite recently.

The Managing Director is now anxious and uneasy about continued production when he has no information when a decision to resume consumption will start.

His biggest fear is to find himself saddled with a large stock that he cannot sell.

If that stock expires tragedy will befall the company.

“We welcome restrictions; on trading hours and also the curfew. We also welcome restrictions on premise consumption. We also think enforcement can help with compliance. A full ban leaves no space to maneuver and that means no revenue. We have a big supply chain that we have to deactivate. And beer takes at 3 weeks to mature. We cannot switch the plant on and off,” says the MD.

A decision to issue the press release announcing suspension of operation was taken a last resort.

Looked purely from a business perspective, it was an innocuous statement that could have passed without much notice.

But for Botswana, KBL is much more than just a business.

For thousands of people it is a source of livelihood – directly and indirectly.

According to that statement suppliers will be receive what could turn out to be the last payments from KBL, pending a big decision by Botswana Government on whether or not alcohol sales and consumption will remain closed.

A review is expected in a few days before the 31st of this month by which time the current regime will expire.

As we sit for an interview, Kliger Diaz starts by waxing lyrical on how thankful KBL will forever be to both Government in general and President Mokgweetsi Masisi in particular.

As his predecessors at KBL have in the past often observed, the alcohol levy was like an albatross on the company.

When presenting the company financials, one of those predecessors, Hloni Matsela said he often felt like he was presiding over carnage. KBL, he said at the time was being bled to death.

Under Kliger Diaz the tone is much different.

On more than one occasion he talks of how a decision by President Masisi to reduce the levy and extend the trading hours has been a saving grace for KBL.

He says he has personally never met President Masisi, by says his company is forever engaged with government.

He says KBL has a big role to play in the education of the public on matters of alcohol abuse and also abiding by the regulations set by government.

It is a role KBL has long embraced, he says. But there have been a few in the industry that have not been abiding.

These he says are bars that have not complied.

They should be treated as a minority. And be made to face the consequences.

For him it is an issue mainly of enforcement of the regulations.

Those who are not complying, he avers are so few that it would be easy for Government to just isolate them.

He stops short of saying a decision by government to ban alcohol based on a few bad apples was ill-informed. But adds that punishment should not be wholesale.

“We are part of the solution. People should follow protocols. We have shared our concerns and made proposals to Government.”

With reference to their recent press release, the Managing Director is adamant: “We hope to be back soon. We are still negotiating with Unions and employees on wages and salaries. Negotiations are going very well. But I’m not at liberty to share those with you,” he says.

“We hope to be back, but we can only do so if we start trading,” he says.

Some of KBL’s biggest local suppliers include fuel companies, logistics companies and also BAMB (Botswana agricultural Marketing Board) from where they buy sorghum especially for production of opaque beer. A huge supply of coal for the boilers comes from Morupule.

All in all, a total of 50 000 people earn a living from the KBL supply chain.

He praises the curfew as a brilliant piece of thinking by the authorities.

So far as the curfew restricts alcohol consumption after hours, it leaves room for KBL to do some trading.

“We have been phasing out. Now we are at the end. I have no options right now. And until I have some clarity, I cannot be able to pay the suppliers. Suspension of operations is really the last option we had.” he says.

He is clearly talking business. But too often his business decisions cross paths with politics such that it is difficult to tell which is which.

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