Parly committee wants BMC monopoly ended

Isaac Pinielo | Friday October 16, 2015 15:16

Tombale was appearing before the Parliamentary Committee on Statutory Bodies and State Enterprises yesterday, which had suggested that an end to the Commission’s monopoly could be one of the solutions to problems faced by the BMC. The Commission is currently haunted by cash flow problems that have resulted in late payments to farmers for cattle delivered.

Tombale indicated that ending BMC’s monopoly might lead to the collapse of the institution, which gets most of its support from government.

Earlier attempts to end its export monopoly were not successful as some parliamentarians felt that the commission should be left as it is.

Tombale noted that the monopoly is not pivotal to BMC’s problems, adding that there are a number of challenges that the commission is facing, including financial constraints.

“As such, we have engaged a transaction advisor to help the BMC with its financials,” he said.

He indicated that currently the advisors are focusing on the finances of the company and the changes on legal status of the BMC. He further pointed out that the model that the BMC has been using since inception is now outdated, expressing confidence that the study by the advisors would define what BMC should be in the future. According to Tombale, BMC has a marketing strategy and has since appointed a United Kingdom consultancy firm, Global Protein Solutions (GPS), to market its products. The company was engaged on a three-year performance based contract.

“They will help in restructuring the organisation’s operations. We are looking at the model of the company and want to restructure our balance sheet,” he said.

The BMC boss also revealed that the working capital of the commission is around P300 million, adding that they want to pay between 65-75% of the revenue that the commission generates to the farmers.

In a recently published working paper, the Botswana Institute for Development Policy Analysis (BIDPA) researchers indicated that the single export channel, through a state trading export monopoly, means that the collapse of the state trader may lead to an instant collapse of the beef industry in Botswana. They pointed out that the potential threat is not far-fetched in that BMC has operated at idle capacity since the 1980s when its throughput began to steadily decline. They added that such eminent threat is also reflected in the poor financial performance of the BMC, characterised by declining and negative profits.They also believe that Botswana’s competitiveness is enhanced by the duty/quota free access of its beef exports to the EU market, while the country’s key competitors are subject to high import duties in the same market. Last year, the African Development Bank and the United Nations Development Programme (UNDP) were quoted as saying that the existence of the BMC as a state monopoly constrains investment, innovation and competition in the beef sector.