Botswana International University of Science and Technology (BIUST) Vice-Chancellor Professor Otlogetswe Totolo has challenged the government to dismantle the Botswana Meat Commission and other state-owned monopolies to open up competition.
He said the move would increase efficiency, productivity and enable the transfer of technology and skills. Citing the Botswana Meat Commission (BMC) as an example, Professor Totolo, at the national competition symposium on Tuesday said at its inception, the parastatals’ monopoly on exports was justifiable.
“It may have been justifiable because of the difficulty farmers faced in accessing external markets,” said the Professor.
Some of the beef standards and quality requirements for accessing the European Union (EU) markets include tough sanitary conditions. While Professor Totolo applauds the BMC monopoly during its early years, he says that the intended plans to adhere to standards have partially been achieved through the monopoly system.
“But the downside is that supply has not been able to meet demand, even with the 18 196 quota. Yet we do have players in the market who are able to meet the requirements of these external markets,” said Professor Totolo.
Professor Totolo believes the government can strengthen its role as a regulator. He asserted it is inevitable for some state-owned entities to be reconfigured and in some cases, to be closed down, as they can no longer compete in the market.
Professor Totolo noted monopoly breeds a lot of inefficiencies in production, service delivery and revenue collection, impacting negatively on the business and reducing social welfare. In addition, he said monopoly entities face no competition from anyone else, leading to inefficiency.
“In these instances, there is the need to carefully look at the service value chain with a view to introducing competition, raising efficiency and productivity,” said the Professor.
Professor Totolo also believes there is the need for the Competition Authority to introduce anti-blocking rules, anti-competitive mergers, harmonise accountability, competitive neutrality, transparency and consistent application rules of subsidy or state aid. Last year, Gantsi North legislator, Noah Salakae told The Guardian newspaper that the country’s meat industry value chain is ‘under siege’ due to export monopoly created through the archaic Botswana Meat Commission Act (BMC) of 1965. Salakae said the Act is limiting the full participation of farmers in the industry that holds the potential to diversify the economy from being mineral resource dominated.
“The Act does not accommodate farmers. The whole thing (meat industry) is run by the minister. The minister issues export licenses periodically, why not have a board of governors,” said Salakae, highlighting that the country’s meat industry remains uncompetitive due to the government’s restrictive hand on exports. Salakae said the development has led to livestock rearing being a hobby rather than a business for most people.
Despite reiterated calls to open up the BMC monopoly, the Commission’s management remains optimistic the parastatal can be restructured and enabled to start contributing positively to the national fiscal purse.
“We are fully engaged in a diversification strategy to regain China, the US through AGOA and Russia is another market,” said Brian Dioka, BMC spokesperson in an interview with Botswana Guardian last week.