To
BeHeld
atIDEP, Dakar, Senegal
14 -17 October 1991
TWA A/A MCA T COMMTCO TOA/r A SUCCESS STORY
by K.C.SHARMA
Organized by United Nations Economic Commission for Africa Public
Administration, Human Resources and Social Deveioomentx Division,'
Special Action Programme
in Administrationand Management (SAP.AM) in
Collaboration withIDEP, Dakar
BOTSWANA MEAT COMMISSION : A SUCCESS STORY ?
(K. C. SHARMA)
SUMMARY
More than two-thirds of Botswana's territory is covered by
desert. Water and rainfall are very scarce and drought is a regular
occuarance. Less than 5 per cent of Botswana's land is cultivable.
Botswana's population, roughly on million, is outnumbered by its cattle numbering roughly three million. The largest contribution to
agricultural output comes from cattle
industry. Extensive cattle ranching is the major agricultural activity. Botswana Meat Commis¬
sion, a public enterprise, kills and processes all Botswana's beef for- export. Beef was Botswana's export before the discovery of diamonds which have now become the major source of income for the country.
From the time of its establishment in 1965 Botswana Meat Commission has grown into a large public enterprise comprising three Abattoirs in Lobatse, Maun and Francistown, cold storages in the U. K. and South Africa, marketing subsidiaries in the U. K. ,
Germany, The Netherlands and South Africa, two transport companies in Botswana, and insurance company in Ireland, warehousing and shipping office in Cape Town and procurement company in Johanesburg. The BMC abbatoirs now have facilities for production
of corned beef, canned tongues, wet-blue hides, salted pelts,
carcase meal, bloodme&l and bone meal, tallow, cattle hair and other products. In 1989 the BMC had a turnover of F 171 milillion.
During 1960 to 1990, the Commission's turnover totalled P 1,600 million of which P 870 million was paid out to producers in payments and bonuses. It paid about P 150 million income tax apart from the tax paid by the employees. In 1990, it paid more than P 20 million tax to Government and P 100 million to producers. It employs over 2000 people and services about 60000 cattle producers.
The Commission was organised as a non-profit making organiza¬
tion in the sense that the surplus generated in a particular year- was to be passed on to the persons who supplied livestock to the commission in accordance with some equitable scheme of division which could either take the form of bonus or increaded producer prices.
The Board of Directors consists of an Executive Chairman and ten other members appointed by the President for three years. The present Executive Chairman who has held this position for some time
now was earlier a member of the Board and Permanent Secretary in the Ministry of Agriculture. The previous chairman was also
Permanent Secretary in the Ministry of Agriculture before he was
appointed chairman. At present, the Permanent Secretary from the Ministry of Agriculture serves as Deputy Chairman. The senior- public servants like Permanent Secretaries or their deputies from
the office of the President, Ministry of Finance and Development Planning and Agriculture have generally been appointed as members by the President. Other members generally have been big farmers or
producers. The Executive chairman, operating under the authority of
the Board is assisted by a team of administrators and a flat pyramidal structure in which members of staff (394) is much smaller compared to labour (1102 hourly paide labour). Only a small number
of staff (17) are expatriates mainly in engineering and accounting
areas. The factory and offices are well equipped with modern machinery, computers, etc.
The BMC8s success could be attributed to the following factors :
Clarity of objectives ;
Stability and continuity in Management ;
Imaginative marketing strategies and favourable terms for
the EEC market negotiated through quiet diplomacy and keen interest of country's political leadership ;
Strict quality control of its products in collaboration with the representatives of EEC and ability of BMC to
respond to the market needs ;
Marketing through its own offices instead of agents, Timely decisions for opening offices overseas, starting insurance, transport companies, cold storages, etc. *,
Sound financial structure and management, following of well organised procedures, control mechanisms, competent accountants, regular pre and post audit. Financial disci¬
pline, accountability, propriety, cautious management and organization of Development Reserve Fund and Stabiliza¬
tion Fund ;
Linkage of remuneration and producer prices with produc¬
tivity. Payment of Bonus ;
Soundness of personnel management reflecting competitive salaries and wages and better conditions of service compared to civil service. Peaceful industrial relations.
Excellent executive leadership ;
Autonomy in personnel and financial management ;
Keen and positive interest and support of the political
leadership and concerned ministries and their Permanent Secretaries (sound veterinary services, etc) ;
Favourable exchange rates ;
Low wages and production costs for some time in the past.
Success story or a case of turn-arcund ?
BMC ' s success story has continued up to last year but the picture before us this year does not appear to be encouraging. This
year only 60 per cent capacity of abbatoirs is being utilised.
Quota given to the producers are not being met. The supply of cattle to the abattoirs and throughput have gone down and are not
picking up. Quality of cattle and cattle management are reported to have gone down. The salaries and wages bills have nearly doubled due to substantial increases last year. All expenses are going up but not the selling prices for meat in export markets. On the
contrary, prices of beef in EEC market have come down by 13 per
cent. The EEC market is flooded with beef and competition is getting tougher. The BMC is finding the rate of taxation to be higher compared to some other public enterprises. With ail these
factors producer prices have not gone up since 1990 and are not likely to do so. There is a strong possibility that the BMC might
be in loss of about P10 million. If the problem of inadequate throughput gets worse and supply of cattle to the abattoir goes down further, some incentives will have to be devised to attract farmers, to bring their cattle in larger members to the abattoirs.
Zero bonus might also adversely affect the morale and therefore productivity of the employees. Exchange rate has served as a coushion and the recent 5 per- cent devaluation could be of some help but. only temporarily. Success and profits therefore may not
continue unless vigorous efforts are mobilised on several fronts.
BMC has to try to make full use of its capacity and it cannot
do so unless the intake of cattle increases. The quality of cattle
also has to improve with better ranch management. The Ministry of Agriculture has to continue to strengthen veterinary services and
address the problem of grazing. Education and information campaigns
have to be strengthened. Cooperatives which could assist the small
farmers are coming up but slowly. These have to be strengthened.
The BMC management also needs to develop a system of early warning
indicators which could assist in undertaking appropriate timely
measures.
The set-back faced by BMC could be temporary and it might pick
up the lost momentum. However, there are some lessons which can be
learnt by other enterprises from this experience. An enterprise running in profit should be careful in over-extending its operations and should weigh the political and social considerations carefully before taking certain decisions like the ones taken by
BMC to start a new abattoir in Francistown and extending the capacity of the one in Lobatse. Inflated salaries and wages need to
be kept under restraint. It should also be realised that certain
o
external factors which may be beyond the control of management and policy makers like drought, disease, cultural values, demand, competitition, prices, as have been significant in adversely affecting the performance of BMC, could be factors in determining"
the performance of other public enterprises.
In any case putting the success and setbacks of BMC together,
one could learn the following lessons. Public enterprises should
have clear objectives. Their Beards of Directors should be careful¬
ly constructed and Executive Chairman, should be competent. Stabili¬
ty and continuity in management and good relations' between
Government and the Board with government preparedness to support and assist the corporation could be quite significant factors in the success of an enterprise. Soundness of financial and personnel management structures and practices and cordial labour relations will detex-mine significantly profitability of public enterprises.
