Botswana has launched the process of privatising its loss-making beef exporting company, the Botswana Meat Commission (BMC).
This follows a report by auditing firm, KPMG Botswana which recommended that the BMC be privatised as a way of liberalising Botswana’s beef export market. According to the Public Enterprises Evaluation and Privatisation Agency (PEEPA), the first major steps of the privatisation process involves appointing consultants. The consultants will be expected to have completed the task of privatising the BMC in August.
PEEPA, which is also a parastatal, is responsible for advising the government on privatisation strategies as well as the implementation of the privatisation process. The process includes commercialisation, restructuring, outsourcing and divestiture interventions for the effectiveness and efficiency of public enterprises and ministries as well as promoting good corporate governance in quasi-government institutions.
PEEPA announced recently that it had awarded two tenders to locally based companies; auditing firm Deloitte Botswana as well as leading corporate law firm Minchin & Kelly, who are expected to have completed their work by August this year on the privatisation of the Commission. The Permanent Secretary in the Ministry of Agriculture, Jimmy Opelo explained through the objective of the privatisation;
“we should see the private sector participate in the development of this country, even in the sale of meat and the meat processing business. The BMC currently has a monopoly of the sale of beef, especially in the export market.”
He said this was not by mistake, adding that the privatisation seeks to repeal this law to free up the sale of meat. Opelo allayed fears that privatisation of the BMC would lead to job losses, noting that if anything, the complete liberalisation of the beef sector would lead to the creation of jobs in the entire value chain of the sector.
He also said that the government was hoping to repeal the BMC Act – which created the existing monopoly – in the last meeting of parliament in July. Opelo revealed that the transitional bill would be brought before parliament when the winter session resumes.
“Currently, the bill is with the Attorney General and we are hoping that it will be brought to parliament on the certification of urgency during the July parliament,” he said.
For his part, the PEEPA Chief Executive Officer (CEO), Obakeng Moumakwa said the privatisation will cost the agency at least 12. 9 million pula. The country’s sole beef exporter has been plagued by operational inefficiencies, aged equipment and low output as well as cash flow problems. It has averaged losses of about 100 million pula in the last three years, resulting in bailouts from the government.
Moumakwa said since the government has taken the decision not to be a player in the sector but to focus on a regulatory role, it also wants citizens to participate in the ownership of the BMC. He, however, said that would depend on the recommendations of Deloitte and Minchin & Kelly for Maun Abattoir and main BMC respectively.
Botswana Meat Commission was established on 24 December 1965 by an act of parliament to promote the development of the country’s beef and related beef products globally. The first abattoir was opened in Lobatse (in the southern part of the country), with Maun (in the northwestern part of the country) and Francistown (in the north) abattoirs following in 1983 and 1989 respectively.
Moumakwa said the government has decided to retain the Maun abattoir and will engage a strategic partner to operate it through a concession agreement. According to Moumakwa, only the Lobatse abattoir and Francistown abattoirs will be given to private investors. He explained that Deloitte Consulting has been engaged to work on separating Maun abattoir from the group.
Deloitte is expected to have concluded its work in the next 10 weeks, while Minchin & Kelly has been given up to September, owing to the magnitude of its mandate compared to the former.
“The consultants have been given three months to have completed their scope of work regarding the BMC privatisation,” said Moumakwa.