BCL closure inflicts dire strain on businesses
Onalenna Kelebeile | Friday June 2, 2017 15:14
The report that was recently presented to the local business community by Professor Happy Siphambe, has shown that firms have lost significant business due to the mine closure. It indicates that some potential businesses whose business plans were approved by Citizen Entrepreneurial Development Agency lost viability due to closure of BCL.
He added that companies whose business relied more on BCL have been highly affected and added that for most of local companies, business went down by more than 50% since the mine closure.
Professor Siphambe said one cooperative Society that was highly dependent on BCL employees for business is so badly affected that its monthly loan income declined from P5 million a month to just P1million or less. He added that one cash loan company had 75% of its business with BCL employees and is now terribly affected.
He said one company that has been operating for many years has seen its value added tax go down from P100, 000 a month to P30, 000 after the mine closure.
“Some companies are financially stressed because they are no longer profitable. One of the companies is struggling to survive because BCL currently owes it P420,000,” he said.
He maintained that BCL and Tati Nickel mines were contributing significantly to the national gross domestic product hence their closure impacted the contribution of mining negatively. He explained that the real value added of mining for the fourth quarter of 2016 declined by 6.2% and attributed this to the closure of the mines in the same period.
“The decline in the mining sector was, despite the 14.3% increase in value added in the fourth quarter of 2016, due to positive recovery in the global market. But the significant importance of copper/nickel still saw the overall performance of the mining sector being negative,” he said.
He noted that most companies have reduced their workforce by between 30 and 50% depending on how much their business was dependent on BCL. “Discussions with stakeholders have revealed that the business environment is not conducive for growing local businesses and attracting new ones.
Some of the challenges include stringent and not well informed work and resident permit system, no affordable land, electricity and water,” he said.
He further submitted that regulators such as HRDC and BQA and other entities responsible for making a conducive business environment should act as facilitators for business to locate and strive here rather than being obstructive to business. “Government has also been shrinking its services in Selebi-Phikwe which is not a positive signal for business,” he said.
He further said that overall impact is generally a negative impact on the growth of the economy, which grew by 4.2% in the fourth quarter. He added that the growth could have been much higher without the BCL and Tati Nickel closures. He added that it is unfortunate that most existing firms are not aware that incentives approved under SPEDU are also applicable to them.
Siphambe however added that there are companies that have diversified their clientele away from the BCL and some already had businesses with Debswana mines, Morupule and other major projects, which still allowed them to survive even with the closure of BCL Mine.
He said Selebi-Phikwe Town Council has now been receiving a high number of applicants for permits and a high number of tenders from small firms leading to overstretched capacity of the municipality, more human resource and increased government expenditure.
The task team recommended that BB in consultation with Chamber of Mines need to mobilise the mining industry in Botswana as well as power industry to fully appreciate what heavy steel industry businesses and other manufacturing industry in Selebi-Phikwe are capable of and further negotiate for a procurement quota to be sourced locally without compromising quality, costs and efficiency of delivery. They say this would protect existing jobs and skills in the area.
They also recommended that BB acts swiftly to resolve matters between it and the Regional Chamber of Commerce to ensure a true voice of business for SPEDU region.
The report further recommends that BB resolve, as a matter of urgency, the interpretation and application of the approved incentive packages for the existing businesses in Selebi-Phikwe region versus new businesses being attracted to the region.
It says that for the incentives to exclude existing new businesses is viewed as highly unfair and imply that government has no interest in protecting existing jobs in the SPEDU area.
It further recommends that BB scrutinise the new incentive packages for substance and depth and consider approaching the Ministry of Investment, Trade and Industry with original proposals.
It also says that the government should make business environment attractive for locating in Selebi-Phikwe through making it possible to acquire residence and work permits expeditiously where required by both existing and new businesses.
The outgoing BB president, Lekwalo Mosienyane urged the business community to think beyond BCL. He said BCL was a national asset and its impact is felt nationally. He warned against fragmented chambers and said this weakens the voice of the business community.