Govt foils plot to bankrupt Meatco
By Hilary Mare
GOVERNMENT’S timely N$250 million Development Bank of Namibia (DBN) loan guarantee to Meatco has foiled an alleged plot by high ranking members of Namibia’s livestock
production sector to bankrupt and shut Meatco’s doors, Confidente has learnt. The plot allegedly targeted at ensuring commercial banks offer no assistance to Meatco in its hour of need ensuring that the corporation
is collapsed, came at a time when Meatco had been given an ultimatum by FNB Namibia to pay back N$100 million of borrowed funds by June 25 or face liquidation. “We are aware of these allegations as they have been brought to our attention. We will not be too concerned with them but with the rebuilding of the company back to its glory days. You must always understand that when there is a weakness in the water, sharks start
to circle but when that weakness is solved, the sharks will automatically go away,” Meatco board chairperson Johnnie Hamman told Confidente this week adding that their foes could try with the upset, but Meatco
would remain focussed on its goals. Asked about the plot to bring Meatco to its knees, CEO Mushokabanji Mwilima said he was not aware of such a plot but if there is evidence to that effect the board
would deal with it effectively. The plot An internal source who refused to be named told Confidente this week that proponents of this plan who lurked in the shadows, hoping that the corporation is liquidated to
their advantage, include livestock industry heavyweights from the Namibia Agricultural Union (NAU) which is a member based organisation which houses the Livestock Producers Organisation (LPO) and other agri-commodity based organisations. “What they wanted was to have Meatco bankrupt and literally stop all operations. This was to put government in a corner so that they would come forward with a rescue plan that would see Meatco go under judicial management governed by a judicial director. This in their view was the best way to get Meatco privatised and subsequently, a full restructuring of the entity that favours their interests could then be fully implemented,” the source said adding that this plot also included shutting out communal farmers. A war chest totalling N$350 million was being arranged so that when Meatco goes bankrupt, this money could be used to kick-start a rescue plan with producers in charge of the entity. Ideally, the producers wanted to grab 60 percent shareholding of the structure, give 30 percent to investors and 10 percent to the government. Confidente also understands that the producers recently abandoned a plan to have a new producer abattoir that would rival Meatco after their research showed viability challenges as well as the fact that Meatco has good market realisation in overseas markets.
Government comes to the rescue Documents seen by Confidente show that at the time when Meatco was at the height of a financial crisis with commercial banks already beginning to distance themselves from the corporation in recent weeks, Finance Minister Iipumbu Shiimi wrote a letter to Public Enterprises Minister, Leon Jooste giving government’s commitment to guarantee a ten-year loan for Meatco from DBN that would be used to pay N$100 million due to FNB thereby enhancing Meatco’s NCA operations and virtually saving the corporation from imminent bankruptcy.“I hereby agree to issue a N$250 million guarantee in favour of DBN to secure Meatco’s borrowing to repay FNB and enhance its operations, with a specific focus on Rundu, Katima and Oshakati as per Cabinet directive. This guarantee covers N$100 million for the repayment of the loan in favour of FNB and N$150 million of borrowing from DBN. Subsequently, Meatco, Treasury and DBN need to conclude a Memorandum of Understanding providing terms and conditions for the utilisation of the N$150 million portion of the guarantee,” Shiimi said in a letter dated June 24 2020.
On the same day, Shiimi also wrote to the chairperson of DBN, Tania Hangula saying : “Given the lengthy administrative process, I request DBN to expedite the disbursement of the N$100 million loan for settlement of the FNB facility while the loan and guarantee agreements are being finalised.” Six years of frustration Meatco’s reserves have been depleting over the past six years and a producer who also refused to be named told Confidente that undue government influence in the processes of how the corporation is run was central to the entity’s misfortunes. He cited producers having had lost their democratic right in choosing board members as one issue that had gotten producers so disgruntled that they sought other avenues to get value out of their produce. “You would recall that six years ago, the then agricultural minister ignored our nominations and installed a board that had the least votes from the producers. This board served for a three year term much to the frustration of the producers. The same board was again given another three-year extension which further irked us to last bit (sic). If you recall, the producers even took the matter to the High Court and won but the ruling was appealed at the Supreme Court and so it meant that we would have again to endure with an illegal board until the Supreme Court made a pronunciation. This has not happened even until now.
“If it had been you in this situation, can you wrong the producers for the frustration that they have endured for so many years? Even when they queried the revenue decline at Meatco, they never got an answer over these past six years. Six years ago we used to get paid in seven days but during this past period, we were paid after up to 60 or even 90 days,” he said attempting to justify why the producers would have felt the need to get the corporation, which they highly regard as theirs, privatised. Producers refute allegations, agree to being disgruntled NAU executive manager, Roelie Venter denied the allegations of a plot to collapse Meatco saying neither the NAU nor the LPO affiliated to the NAU, was involved in any discussion with any bank regarding Meatco. “The NAU and its affiliates have no control over Meatco board decisions or any influence on financing decisions of commercial banks,” he said adding that it is correct that producers were disgruntled as the members appointed were not in alignment with the democratic principles of Meatco AGMs for nominations to the board. “This led to a loss in trust by producers supplying to Meatco, and alternative market destinations such as auctions and abattoirs slaughtering for the local market were utilised. The LPO has repeatedly stated that an efficient beef export value chain is indispensable for a sustainable cattle market. However, despite Meatco’s market access to the best beef export markets in the world, they were not able to attract sufficient slaughter cattle from the Namibian cattle market,” extended Venter. Confidente understands that the LPO conducted a study to fully understand the beef export value chain. This study indicated that a beef export abattoir like Meatco realises more than N$80/ kg carcass, while the primary producers receive N$38,50-N$45/kg carcass.
In view of this, Venter noted that the operational cost of Meatco is currently in excess of N$40/kg carcass and way above the international benchmarks and realignment is imperative to address the gap. “The view of the LPO is that the first option is to ensure that Meatco is an internationally competitive operation that is able to automatically attract cattle to this value chain through a price-pull mechanism, by paying the best price in the market on a consistent basis. If this can be achieved Namibia’s primary livestock production can recover and improve its contribution to the GDP. If this objective cannot be achieved, primary producers will have to investigate other options to ensure their own survival and sustainable future,” Venter explained.
Speaking about a reconciliatory path with the producers, Hamman said that Jooste for the first time in six year had chosen a board that the producers had voted for and an outreach liaison programme was on the cards to ensure that the relationship with the producers returns to its glory days. “The board together with the executive will embark on an outreach initiative to reach out to the farmers in various places including Gobabis and Otjiwarongo. We are also looking at how we can improve how we pay farmers and producers with quicker turnaround times,” he said