‘Why BMC collapsed’
• BMC paid GMR Consultant P1 million monthly
• EU market not the best in the world – Molapisi
Appearing before the Parliamentary Select Committee last week, former Botswana Meat Commission (BMC) General Manager (sales and marketing),Sonny Molapisi said the BMC board often ignored management’s advice, something which contributed to BMC’s downfall. For instance,management saw no value-addition by the GRM consultants and emphasised that GMR Consultants were not doing anything extraordinary, so their two-year contract should not be renewed.
“The board ignored our advice and went ahead to renew GMR Consultants’ contract. On average, BMC was paying about P1 million monthly to GMR Consultants,” he said. Gazette Business has learnt that the contract value was P10 million. According to Molapisi, GRM complained to the board that the management refused to implement some of their ideas and therefore wanted to report directly to the board and the board entertained them yet logistically they were not supposed to deal directly with the board.
Molapisi said that the continued engagement of the GMR Consultants contributed to the fall of the BMC. Other contributing factors to the BMC fall, he said, included the signifi cant fall in the exchange rate at the time, the global recession, having CEOs from the civil service who knew nothing about the beef industry and had no business management background, under pricing of beef by its London-based subsidiary, and the traceability system. He, however, said that GMR Consultants that was engaged in good faith to help the BMC turn its fortunes around did help them with some new strategy. To their credit, it was only after an independent study by the GRM that the Lobatse management learned with shock that the London subsidiary had been under pricing the Botswana beef, which led to loss of revenue by BMC. Molapisi said the BMC did not have the capacity to determine its own prices and was dependent on the UK subsidiary.
“We had been living under the belief that prices we were getting from the London offi ce were the best for our beef. The study revealed that our beef was selling at a relatively lower price than our competitors and also that BMC has not been getting the best price,” he explained. He added that they believed the BMC meat was comparable with the Brazilian and Namibian beef which “we used as our enchmark for the EU market.” For the Botswana market, he said, they compared their pricing with the South African market price but they did not sell at a rate lower than that of South Africa. Committee member, MP for Tswapong North Prince Maele, asked what the BMC did after the revelations of the study. Molapisi said the management took a decision to restructure the London office by relieving some of the top management staff of their duties. “It appeared that the London office was playing the head offi ce role while the real head offi ce was here in Botswana, Lobatse BMC,” he said. Molapisi said the Botswana CEOs were dependent on London subsidiary offi ce executives. “At times the CEO at the head offi ce had to learn the ropes from the London based one because it does not have a high staff turnover as compared to the Botswana offi ce,” he said.
It is further understood that GRM had drawn up a budget and presented it to the board, indicating a 72 percent turnover and that this would go towards paying farmers and the remainder to BMC salaries.The board then decided to increase the producer price by P2 depending on the budget drawn. “They did the budget and lost sight of the fact that not all cattle were eligible for EU market. Although we highlighted to the board that the budget had errors, unfortunately the board thought we, as management, were refusing to implement what GRM suggested,” added Molapisi.He further stated that the European market is not the best in the world, as many people assume. He said the market is best for some cuts whilst in some it is bad. “In cutssuch as fi llets, the EU is a good market to pay for remium prices for the cuts, but as for the carcasses they are the worst market,” he said