With the continued demise of public enterprises and a difficult operating environment, our Reporter Kandjemuni Kamuiiri’s interviewed Meatco’s Chief Executive Officer (CEO), Mwilima Mushokabanji (MM), on the state and future of the company. Below is an extract of the interview.
WO: Is Meatco under any threat that could see it fold in the short to medium term?
MM: We were either going to adapt or perish and as management, we decided to adapt. For Meatco management we are not in a crisis, it’s something that we already saw into the future and we have put up systems, processes and strategies to make sure that when times like these arise, we are able to address these things. There are no surprises to the fact that we are struggling.
WO: What is your comment on the Rainer Ritter’s findings and recommendations about the business’s viability?
MM: Our biggest concern was, we were not aware of that report, we don’t know who conducted the report, we don’t know who designs the terms of reference, the outcome of the report was not shared with us, we are only seeing that through WhatsApp. We are intellectuals, we don’t respond to naked opinion that flies into the media. If there are any scientific assessments and research that were done to improve public policy and business, we strongly believe that there are official and professional channels on how such reports should be shared with or board and management. I could’ve received that report addressed to my office in order for us to basically introspect and digest it, but unfortunately, we did not get that information.
WO: Do you agree with sentiments raised about the business’s viability?
MM: The report indicates that Meatco has debt of around N$800 million, which is not factual, it is not accurate information and that should not be allowed and such authors should not be condoned in our society because they mislead society. We are running a business, we are professional people. I gave you the real figures that you will be seeing in our annual reports in terms of our debt levels. We are stable as institution we are very optimistic. As per the other recommendations that were aired in that particular report, we have got a totally different perspective as management of Meatco.
WO: Concerns have been raised about crisis or failure of the business to comply with governance. Is this the case at Meatco?
MM: Here at Meatco it is not about quantity, it is about quality, About Meatco’s sustainable competitive advantage and we export into advanced economies like the US, Europe and emerging economies such as China. Agriculture is the backbone of the economy. If you look up the total agricultural contribution for GBV 2019 was 6.8 billion, that includes agriculture and forestry but Meatco contributed twenty-six percent of that which, was equivalent to 1.7 billion. The total industry contribution was eleven billion. Meatco plays a critical role in the Namibian Economy. I just want to give an assurance to the rest of the country, the stake holders and our partners that Meatco has a very strong and enlightened board in place with a very strong team of management, graduates educated and extremely experienced in the life stock industry, there is no doubt about it.
WO: What is your comment on concerns about short comings of the company’s abattoirs and calls for the engagement of consultants to assist in the process?
MM: In a time that the country had drought, farmers were told to sell their animals otherwise cattle would be thin and they were going to die. The demand was high for Meatco, throughput was very high and as Meatco we could’ve chosen to say we are a business, we are going to lower the price and we could’ve made profits that year. But we lowered the prices for the farmers, paid them N$1.1 billion, the company struggled to find markets internationally and this affected Meatco’s bottom line. We took the burden of freeing the farmers. We are building a new Meatco that is now based on inclusivity so that we don’t just demand for quality from farmers but be active participants and help farmers produce good quality animals. What drives a farmer to remain in primary production is when the farmer realizes better retains on their investment.
We have a department now whereby on a monthly basis here in Meatco we invite the farmers, and also, we go out to provide good, quality agricultural advice services. With the rain we are receiving now, as Meatco we are extremely happy, its partly affecting us because normally when it rains the farmers hold their cattle to restock in order to allow the cattle to gain extra weight and be healthier, especially after experiencing frequent drought in the past ten years. Meatco is managing the issue with excitement because in the future there will be bigger benefits for the producers, for Meatco and the government as a key stakeholder.
What’s your comment on the outbreak of Foot and Mouth Disease (FMD) and its impact on the business?
We are working together with the Ministry of Agriculture as Meatco to make sure that the situation of the northern of the communal area that the FMD outbreak is contained. Our short-term strategy is to intensify vaccinations, there is a need for the private sector, for the public sector and the non-state actors for us to continue working together to make sure that we contain what is prevailing there. We are not concerned about the report circulation in the US, everything is under control. We have got systems and processes and the industry is pulling in the same direction to make sure that it’s contained.
WO: Why did the business take the decision to set up a company to focus on the Northern Communal Areas (NCAs) and is the business seeing any benefits to the decision?
MM: We have got 1.6 million herds of cattle in the Northern Communal Areas (NACs) and there is an opportunity here. We have got a transformational strategy to shut down the myth and misconception that the Northern Communal Areas cannot be productive, as Meatco we are going to change that. We have just signed the Africa Continental Free Trade area that allows us to have access to one of the biggest markets on the continent, hence the meat from the Northern Communal Areas. If we don’t improve the value and the quality of catering in the Northern Communal Areas, there is no ways producers from that part of the country can be advertised. I just came from there last night, we engaged with the farmers and they are extremely happy and looking forward.
WO: What has Meatco done to reduce its operational costs, and has the business renegotiated any costly contracts or terminated some?
MM: Our strategies are premised on three key issues, good quality and quantity throughput, operational efficiencies in the system. What we have done is debt reduction. Our total long-term debt is at N$382 million and a short-term debt of N$100 million. We have totally and drastically reduced that. Before the end of this year we could have slashed this by 50 percent without any reservations because we did that the whole of last year. Sixty percent of Meatco’s source of losses was in paying interests to the banks, that is the biggest challenge for Meatco. If you reduce that, you are making Meatco profitable and sustainable. That is why you see a lot of progress.
In terms of operational cost, we have developed a new strategic plan for 5 years and an execution plan, we have revamped our systems and processes and cut down on all inefficiencies that we had in the system. We are busy aligning ourselves to the Public Procurement Act, to make sure that in terms of corporate governance we don’t want to compromise on that and it has proven to bear fruits. By the end of this year, and probably by the end of next year, we should be a profitable institution and that is inescapable. We are very serious about that and we are very aggressive about that we need to make sure that we have got a balanced approach in terms of the available resources in the country, that we should be able to slaughter to survive without affecting primary production. What we would want to see is industrialisation and we do have ‘the growth at home’ policy, which Meatco prescribes purely to when we look at the context of exportation of any raw materials out of the country.”
WO: What has the organisation done to reduce middlemen in the company supply chain and what immediate benefits have been recorded?
MM: What we are busy doing as part of operational efficiency as Meatco, is that we are not going to be an institution that exist and that relies on outsourced services. In our new strategy we are busy internalising everything. What we did was a course benefit analyses, and it came out very clear that it is much cheaper when we train our own people to actually provide some of the outsourced services, so we have turned around that. it has improved our corporate governance and we have done a lot of savings and moving forward. We are busy retaining older services into the institution, that is one aggressive strategy that we are busy with, and it is bearing fruit. But remember at the same time we have got no choice because we need to make sure that we religiously and faithfully abide by the Public Procurement Act. So, any expired contracts, where there were no contracts in place, we have basically terminated them.