Sour setback

Baitshepi Sekgweng
NO MILK: The Milk Afric plant

Another investor dumps Milk Afric

Al Rawabi Dairy the latest to pull out

The much anticipated Milk Afric Project in Lobatse seems far from availing milk for industrial and household consumption after another investor, Al Rawabi Dairy Company, pulled out of a deal with Botswana Development Corporation (BDC).

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Currently, the P92 million plant is lying idle in the Sunnyside Farm and the Government is looking for another investor, with an Expression of Interest (EoI) expected to be floated before end August 2023.

“The company has over 40 years of experience in the industry. The proposal was to start off production with a minimum of 2000 dairy cows through debt funding of USD60 million sourced in the United Arab Emirates for the project. However, the company proposed concessions which were too onerous for BDC to meet and as a result, the request was declined,” said Minister of Investment Trade and Industry, Mmusi Kgafela on Monday.

He added; “Following the decision to reject the onerous request, the Company withdrew from the transaction thereby bringing the deal, and discussions thereon, to an end”.

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Kgafela said the BDC will start looking for suitable operators who can lease the farm and preference will be given to citizen wholly owned companies. “An expression of interest will be floated during the month of August 2023 in that regard,” he said.

Prior to engagement of the UAE Company, BDC identified a wholly citizen owned company in June 2021 for a technical partnership and a new investment structure was proposed, but was different from what they had submitted.

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“The reason being that they desired to earn a higher return on investments within shorter payback period. In addition to the change of structure, they clearly highlighted that BDC had to secure and ensure water supply for the farm. The company was expected to share all necessary transaction documents to be able to implement the project and share technical advice on the implementation of the project, more especially the infrastructure, as well as sign off on the final agreements of the partnership. The exclusivity lapsed, and they requested for an extension up to 31 May 2022. The extension was granted which also lapsed without much traction on the supply of information. BDC subsequently terminated the discussions,” Kgafela said.

The trade Minister added that there are no plans to procure dairy cattle for the dairy project, but that the successful bidder on the Expression of Interest to lease the farm will be assisted with information to source cattle from United States of America, New Zealand, Australia, and Europe.

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However, Kgafela said the ministry of Agriculture has established Pitsane and Serowe Milk processing plants to facilitate market access to dairy farmers but they are yet to commence operations since they need refurbishments.

He said BDC also intends to lease Tshiname Farm in Lobatse to enhance the development of fodder production, as well as develop and upskill small scale farmers. He added that the new farm operators will be required to assist in increasing the national dairy herd, assist Lobatse to become a strategic dairy farm area, and to promote research and development in the sector.

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He was responding to an enquiry by MP for Lobatse Dr Thapelo Matsheka who had wanted him to update the House on the status of the dairy project. Matsheka said the plant has become one of the country’s tourist sites as it was frequented by councilors for briefings and not producing what it was established for.

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