While its actions during the lockdown and a decade of a punitive levy may suggest hostility towards the liquor industry, government appears to not only acknowledge the sector’s profitability, but wants an increasing piece of the pie.
This week, state investment agency, Botswana Development Corporation (BDC) announced that it had taken up a 24% stake in Kamoso Africa, whose subsidiaries include Liquorama, the country’s biggest alcohol retailer with 53 outlets.
In a deal reportedly worth P200 million, the BDC this week announced that it had snapped up equity in Kamoso, a manufacturing, supply and distribution titan linked to Choppies CEO, Ramachandran Ottapathu. Companies and Intellectual Property Authority (CIPA) records on Wednesday indicated that Ottapathu still holds about 15% shareholding in Kamoso, having sold most of his equity in a P452 million deal in 2015.
The latest deal means that government has indirectly spread its stake in the country’s alcohol sector from manufacturing to retail distribution. Through BDC, government already had a 33% stake in Sechaba Brewery Holdings Limited, according to the latest CIPA records. Sechaba holds 49.9% equity in Kgalagadi Breweries, the producer of brands ranging from St Louis and Black Label to Redds.
The BDC paid government P20 million in dividends for the year ended June 2019, down from P25 million in 2018, representing one of the rare dividend yields from state-owned enterprises, which are generally loss-making.
The Ministry of Finance and Economic Development’s estimates show that government expects to receive P40 million from the BDC in 2020/21 which, if realised, would be the second highest amongst state enterprises after the Botswana Telecommunications Corporation Limited.
Government also expects to rake in up to P330 million from the alcohol levy this year, down from P350 million in 2019/20.
While the decision to invest in both Sechaba and Kamoso are BDC board matters, government as the Corporation’s sole shareholder has much weight on the matter. According to its constitution, the Finance and Economic Development minister appoints all BDC board members, including representative directors from the ministry and the Investment, Trade and Industry ministry. The Finance minister also appoints the board chair.
The latest foray deeper into the liquor sector, comes as reports emerge of disunity in the highest circles of government and the coronavirus task team, around the treatment of alcohol under
Mmegi is informed that while liquor traders and their parent ministry, Investment, Trade and Industry, had agreed on reintroducing sales via remote orders and off-premise consumption, the plan was shot down in the highest coronavirus task team.
A majority of Cabinet members were also reportedly against the resumption of trade, with some openly speaking out during the last special sitting of Parliament.
“The liquor traders association drew up a plan and the trade ministry agreed that alcohol sales could restart via takeaways or off-premise consumption,” a highly placed insider told Mmegi. “That plan was adopted and taken to the task team where it was shot down.
“It was felt that alcohol should be the last thing considered while the fight against the coronavirus is going on.”
The alcohol industry, from producers, distributors, large retailers to bars, restaurants and bottle stores, is estimated to employ up to 50,000 countrywide.
According to Business Botswana (BB) president, Gobusamang Keebine, the resumption of alcohol trade, via “takeaways” had been agreed to between the private sector and the trade ministry during a recent meeting.
“When we met, we all agreed that we were developing a wish-list agreed between trade and the private sector but when it got to the inner task team of the president, a few of those things were dropped out for that phase of the lockdown such as restaurants, which we had recommended should be opened for sit-down,” he said in a video released by BB this week.
“We also recommended and agreed with the ministry of trade that alcohol be done on a takeaway. This was a wish-list and it was not accepted.
There were a number of them not accepted, but the majority were and we are seeing them rolled out.”
Keebine added: “BB is part of the presidential task force and we fully support government as well as the phased reopening of the economy.” It remains to be seen when alcohol sales will resume, but government officials this week said the lead would come from health officials.