COVID-19 forces B&M to scale down output
Chakalisa Dube | Monday September 13, 2021 06:00
The company has been in Botswana for almost two decades and its main shareholders are from Mauritius.
Before the onset of COVID-19, the local textile and clothing sector was already facing numerous challenges, including competition from imports into Botswana and competition against other countries exporting to the key market of South Africa. The pandemic appears to have now worsened the situation with many textile units either closing shop or reducing production.
“This pandemic has affected our business significantly and our sales and production have gone down by more than 50%,” B&M managing director, Krishna Chinniah told BusinessWeek. “Last year and this year will be loss-making because we are operating below our break-even point. “We are unable to cover our overheads.”
He added: “Since early last year, there has been a notable increase in the cost of utilities, transport, raw materials and accessories which have gone up considerably. Our exports to SA have become more expensive compared to our competitors”.
Chinniah explained that monthly production has gone down from 50,000 units of T-shirts and sportswear to 25,000 units. He added that COVID-19 affected the smooth delivery of the company’s products to South African and Zimbabwean customers.
“Our trucks are spending more time at the border because of COVID protocols. PCR tests conducted at the border have also heightened costs because we have to give more allowances to our drivers and pay for PCR tests for every trip.”
Sixty percent of the company’s market is in South Africa, while 20% of B&M garments are sold to Zimbabwe. Another 15% of the company’s products are sold locally.
The MD added that the challenges associated with travelling under COVID-19 conditions have also caused delays in the sourcing of import raw materials such as chemicals and accessories from SA and transportation of the exports of finished goods to SA and Zimbabwe among others.
However, Chinniah said that there is a likelihood that the company might not retrench when the State of Public Emergency ends on September 30.
According to the MD, most of the company employees are under contract and the renewal of their contracts depends on orders from clients. However, after the SoE, the firm will check if “things get better or worse, then decide accordingly”.
The firm has 20 permanent employees and 120 contract employees.
The MD appealed to the government to consider giving the textile industry a bailout.
“The government for example can subsidise the raw materials we source abroad as well as other things such costs of utilities. “Government must also re-enforce the ‘Buy Made in Botswana’ initiative. “We are struggling to sell locally because of cheap imports.”
Most textile firms have called on the government to give them a bailout. They have warned that there will be severe job losses if the government does not offer textile companies any form of subsidy owing to the current economic circumstance.
It is estimated that local textile prices are five percent higher than SADC competitors, which makes it difficult for local firms to compete with their regional rivals.