Job losses steal festive joy
Mbongeni Mguni | Friday December 23, 2016 13:13
At the end of November, Mmegi estimated that at least 9,000 jobs had been lost directly in these sectors since July. Add to that, more scheduled retrenchments at the Botswana Investment and Trade Centre, downsizing at Majwe Mining, the Cut 8 contractor and 400 more jobs at Lucara Mine, through the axing of a mining contractor.
Retrenchments have taken or are taking place at BCL Mine, Tati Nickel Mine, Air Botswana, Banyana Farms, Botswana Housing Corporation, Botswana Power Corporation (BPC), Botswana Meat Commission and the Water Utilities Corporation (WUC).
Those planning on reviewing their structures in processes that could include retrenchments include the Botswana Agricultural Marketing Board and the Local Enterprise Authority. Even the Public Enterprises Evaluation and Privatisation Agency (PEEPA), which only has 26 staff members, is planning a restructuring.
The figures will swell beyond 10,000 direct job cuts and thousands more indirectly through suppliers of goods and services, as well as the knock-on effect to overall demand in the economy.
Using an average family size of four (two parents, two children), a minimum of 40,000 people are facing a bleak 2017, preceded by a very “unfestive” Christmas period.
Botswana Chamber of Mines CEO, Charles Siwawa previously told Mmegi the job situation in the mining sector was grave.
“From an employment point of view, you are putting plus 5,000 people on the streets and that’s very large by any measure,” he said.
“Unemployment is the big issue now and it’s coming at a time when general unemployment in the economy is already high.
“If there were other mines opening, you could slot the unemployed miners in, but we don’t have that right now.”
Siwawa added: “Some skills may be retooled and workers re-employed in different positions. Some may have already reached their retirement age. Workers in generic positions such as accountants and electric engineers will have better prospects”.
The already uncertain situation in the BCL group, where nearly 5,000 were axed in October, has since worsened.
A lawsuit by Norilsk Nickel over a P3 billion equity takeover deal with BCL Mine, has essentially frozen the liquidation process. Since the suit was filed late November, Nigel Dixon-Warren has been unable to conduct critical processes such as the sale of the BCL jet and review of assets, which are required ahead of the February creditors meeting where those owed by BCL will hear how they will be paid.
In fact, the February 7 creditors’ meeting is now in jeopardy and may not take place.
In a recent filing, Dixon-Warren said the judiciary will soon be taking its festive break and could be unable to give directions on the matter by February 7, which is the day the High Court had originally ordered the provisional liquidator to report back under the original provisional order granted in October.
“I am of the view that it is intolerable that I am put in the aforesaid position.
“I have been charged with conduct of this provisional liquidation, which is a matter of national interest, on direction of this Honourable Court.
“It seems quite improper to me that I be shackled in the discharge of my obligations for so long as Norilsk’s application is on record.
“On a daily basis, I am called upon to make decisions in my capacity as provisional liquidator and I have not been able to do so since taking delivery of the application for fear of constructively obstructing any orders that this Honourable Court could make in due course,” Dixon-Warren said.
Going into 2017, however, the axed miners across the country could see their fortunes improve. It is expected that BCL group liquidation process will result in a resumption of operations, albeit limited, while at Lucara, a large number of the retrenchees will find work with the new contractor.
The general upsurge in non-mining sectors such as construction, financial services, water and power powered by the Economic Stimulus Programme is expected to continue in 2017, supporting jobs and growth. Agriculture, as well, could spring a surprise jump in formal and informal jobs on the back of the forecast for strong rains this season.
In the parastatal sector, however, matters are different. At BPC and WUC, the job losses are not only real but permanent, as both utilities ran collective operating losses of P2.2 billion for the 2015/16 financial year and are wholly dependent on further billions in government subsidies for their sustenance.
From the downturn in mining, to reductions in government subventions, efficiency initiatives and to poor financial positions, the reasons for the job losses have varied, but the results have been the same. Despair, defeat and desperation as the nation breaks for what should have been joyous homecoming.
The pain in parastatals
Botswana Power Corporation (BPC)
The BPC’s well-chronicled troubles stem from the failure of Morupule B to fully function, which in turn has resulted in huge operational losses as a result of increasingly expensive imports and non-cost reflective tariffs. The BPC also suffers from operational inefficiencies, including system losses and poor recoveries. The latest round of job losses is focussed at Morupule B where a decision to divest has been taken. The new investor will likely retain some, but not all of the previous staff. New CEO, Stefan Schwarzfischer is globally renowned for “organisational transformations” and is expected to swing the axe at BPC, having previously been involved in a restructuring at the Botswana Meat Commission.
Water Utilities Corporation (WUC)
The WUC’s troubles originate from the ambitious 2009 Water Sector Reforms Programme under which the Corporation began taking over the supply of water to all urban centres and villages. As stated by the previous CEO and chairman, as well as the current leadership, the process inflated the WUC’s operating expenses, while commensurate support, even by way of tariff adjustments, was not forthcoming from treasury. The WUC has struggled in recent years, failing to pay workers and meet its obligations. The Corporation needs P1.5 billion for operations and another P10 billion to spruce up and develop its infrastructure. The expected retrenchments are the fourth round in recent years.
Botswana Housing Corporation (BHC)
The Corporation has hit hard times in recent years as government has frozen increases to the rentals BHC charges tenant since 2004, while the cost of new developments has eaten away at the cash flow. The rental freeze has meanwhile been accompanied by a rise in maintenance costs of the same assets, meaning the BHC is hit in the pocket twice. A slowdown in property sales has also slowed down the Corporation’s remaining lifeline.
Air Botswana
The national airline has been struggling to break even for years and was the chief target of the privatisation policy. The airline’s aging fleet, high maintenance costs, equipment failure, route redundancy and pressure from competition have led to running losses over the years. A number of aircraft are grounded for good and refleeting is yet to take place. The latest job cuts follow a narrow escape for 300 workers in 2007 when the SA Airlink deal fell through at the last minute.