While maintaining a hardline on parastatals relying on government handouts, finance minister Iipumbu Shiimi allocated an additional N$250 million to the struggling meat corporation, Meatco.
Shiimi announced this yesterday while delivering the mid-year budget review statement for the 2023/24 financial year.
“Regarding the stock of guarantees, we do not envisage further significant disbursement in the short term, except for an additional N$250 million guarantee in favour of Meatco during the current financial year,” he announced.
The former central bank governor was, however, quick to note that Namibians are paying dearly through parastatal bailouts.
“Continuing to bail out public enterprises takes away resources that are needed for critical social investments in education, healthcare, housing, agriculture, social protection, etc. The situation at some public enterprises, thus, warrants urgent and bold actions to ensure the sustainability of these entities,” he stated.
He added that the fiscal risks from the operations of public enterprises have increased significantly through both requests for budgetary allocations as well as the settlement of government-guaranteed loans.
The move to bailout Meatco was seemingly welcomed by some MPs, who spoke to this paper outside the National Assembly chambers shortly after Shimii’s delivery.
A commonality that could be deduced from their statements is that the days for State-owned enterprises (SEOs) clamouring for bailouts are numbered.
Defence minister Frans Kapofi said Meatco has been through thick and thin.
“It is a very strategic asset of the State, and you cannot ignore that. It sustains the lives of so many people in our country and as you know, agriculture or farming is the backbone of our economy, so it is a worthy undertaking,” he said.
Kapofi, at the same time, took issues with mediocre SOEs, which, he said, must “wake up from their slumber”.
“The minister [Shiimi] is right. Action must be taken, because when you’re dependent on someone every day, you don’t make efforts to change things, so what is the point for you to exist if you don’t add value to anything?
“This is chronic in our government. That’s a problem we have. Life is tight. The economy is hard. We must try the best we can,” the politician added.
Adding her voice to the discourse was Popular Democratic Movement lawmaker Inna Hengari, who premised her argument on reforming Meatco.
“There must be representation in terms of ensuring that even young farmers are able to sit on the board,” Hengari said.
She is against the calls by certain quarters to collapse Meatco.
“I don’t think the duty of any public leader is to shut down public enterprises. I think those public enterprises can be assisted or further be reformed, whether legislatively or even financially; we should take a chance with those so that we don’t end up with companies that are completely privatised across the country,” Hengari added.
Her sentiments were echoed by Emma Theofilus, the deputy information minister, who said the finance minister is supposed to rule with an iron fist and make sure SEOs are performing because that’s the only way to get the necessary dividends to fund some activities on the budget.
She added: “The SEOs need to perform in order to ensure that they don’t suck from the Treasury any further”.
The Meatco bailout comes at a time when around 250 farmers are owed N$320 million by the company.
It also comes hot on the heels of calls by local beef producers, demanding a seat at Meatco’s table, offering their expertise.
They believe they can rescue the cash-strapped parastatal.
“We do not want to point fingers at anyone, but if Meatco collapses like Air Namibia or the SME Bank, Namibia will be in trouble. We cannot allow Meatco to fail. The agricultural sector has the potential to uplift this country. Let us put our hands together to fix Meatco. Let’s bring expertise and appoint the right people. We can turn Meatco into a profitable organisation within a year,” beef producer Rian van Wyk said recently.
Van Wyk also pleaded to Shiimi and his agriculture counterpart Calle Schlettwein, saying: “We are not interested in politics. We want to do business. We are pleading with Schlettwein and Shiimi to sit with us for us to show them what we can bring to the table. We have a lot of expertise to offer”.
While Meatco maintains it is a company out of the woods, producers and industry players opine it is an entity in financial ruin.
Earlier this year, a forensic report by Ombu Capital, a firm owned by former Standard Bank Namibia CEO Vetumbuavi Mungunda, revealed that Meatco loses at least N$5 million a week.
That report covered a seven-month process of analysis and sector-wide consultation, and recommends what the authors view as a viable business model for Meatco’s long-term sustainability.
In August, it was reported that Meatco generated N$297 million between May and June this year.
In May, 7 681 animals were slaughtered at Meatco abattoirs countrywide, while June figures stood at 11 379.
Since January, over 38 000 animals have been slaughtered at Meatco’s slaughterhouses.
On the marketing front, the total marketed volumes for January-June were 5 515 metric tonnes.
In the process, N$444 million was derived from local, regional and international markets.
- emumbuu@nepc.com.na