05 Aug 2014

Parliament, on August 4, resolved to authorise a government guarantee that will see Standard Charted Bank of Botswana extending a P300 million loan to the Botswana Meat Commission (BMC).


This came after the Minister of Finance and Development Planning, Mr Kenneth Matambo tabled a notice of motion to that effect.

He said BMC had approached government requesting a government guarantee cover of the loan that it had negotiated with Standard Charted Bank.


Mr Matambo said BMC had reasoned that farmers were paid after 15 days although they had been used to the previous 48 hours waiting period, which resulted in difficulties in attracting cattle from farmers who preferred cash on delivery, or at least payment within the shortest possible time.


He said though farmers expected to be paid immediately, the nature of business at BMC was that it realised returns from their finished products after five months.

He said the loan would enable BMC to buy cattle, feeds and medicine as well as meet its requirement for working capital while it still awaits payment from clients.


Mr Matambo said with regard to BMC’s financial performance, the commission made a loss of P302 million in 2012 and a profit of P30.11 million last year.

He said current projections indicate that BMC will continue to make profits from this year onwards.


Mr Matambo said after the evaluation of the BMC request for a government guarantee and assessment of its financial performance, it was recommended that a guarantee should be extended to cover the loan sort, which will cover a period of eight years.


“It is believed that in this eight year period BMC would have accrued adequate capital to operate without a need for this loan facility, or would be in a position to raise the facility without seeking a government guarantee,” he said.


Contributing to the request, the Member of Parliament for Tati East, Mr Guma Moyo opposed the proposal, saying the negotiation with the bank is not in public interest, but rather a business transaction between farmers and the BMC.


He said reports tabled previously before parliament showed that BMC is struggling and therefore pumping more funds into it is poor financial management, which will further drain the economy. 


Mr Guma advised that BMC needs restructuring rather than a loan as this will further increase its liabilities.

However, most legislators who stood to debate supported the proposal, saying most farmers in the country depend on the BMC as their sole buyer, and said it is important that the organisation is bailed out to avoid collapsing.


They also supported Mr Matambo that the loan will enable the commission to pay farmers in time, as the current practice where they are paid after 15 days makes it difficult for farmers to plan financially.


They said such a long waiting period has been leading to farmers selling their cattle to butchery owners at a cheap price because butcheries pay immediately.Ends