AB, BMC queue for P200m bail-outs
Mbongeni Mguni | Friday September 18, 2020 18:33
The two parastatals are amongst a list of perennially struggling government entities, with AB cutting its workforce by half as part of efforts to trim down and stay afloat. The BMC in recent years, meanwhile, has survived only through government support, piling on hundreds of millions of pula in loans in the process.
According to a supplementary budget request tabled by the Finance Ministry in Parliament this week, Air Botswana is requesting P100 million as “short term” funding to sustain its operations. The national airline’s troubles were worsened by the travel ban in place since April as a response to the COVID-19 onset.
“Air Botswana has been grounded due to COVID-19 movement restrictions since April 2020 and therefore has experienced a decline in its revenue streams to sustain itself, including on its most profitable route, Gaborone- Johannesburg,” Parliament’s Finance and Estimates committee said in a report.
“On this basis, the committee approves this request.” The BMC, on the other hand, requires additional funding in order to clear outstanding debts to feedlotters and small, medium and large-scale farmers. Feedlotters and farmers have frequently hauled the BMC over the coals for delays in payments for feed and cattle, a situation that cripples the beef value chain.
“The committee has observed that for years the BMC has been failing to sustain itself, therefore regularly depending on supplementary budget.
“In this regard, the committee advises the Ministry to implement the BMC turnaround strategy and wean BMC off Government assistance,” reads the Finance and Estimates committee report. The committee, chaired by Kanye North MP, Thapelo Letsholo, noted that its members had “agonised” over the BMC funding request as it did not “appear to meet the criteria”. “We however found it imperative for the BMC to pay the farmers who have to bear the brunt of the BMC inefficiencies and our decision to approve the funding is based solely on protecting these farmers,” the committee report reads.
Last year, AB said it planned to trim down 210 employees from 450 with the majority of departures headed to a new subsidiary, in order to focus on its core mandate.
The airline, which also retrenched in 2016 and 2017, while also getting rid of the old planes and refleeting, has experienced running losses since 2008, due to an aging fleet, high maintenance costs, equipment failure, route redundancy and pressure from competition.
The BMC’s troubles, meanwhile, stem from frequent Foot and Mouth Disease outbreaks and losses from the Francistown and Maun abattoirs. The intensifying effects of the El Nino phenomenon over the years have also meant both lower cattle numbers delivered to the BMC’s abattoirs and poor quality of beasts.
Government has put both AB and BMC up for privatisation.