The Meat Corporation of Namibia (Meatco) and TransNamib Holdings are set to receive substantial bailouts from the government’s budget for the 2024-2025 fiscal year to support their operations.
Minister of Finance and Public Enterprises, Iipumbu Shiimi said Meatco has been allocated N$212 million to settle contingent liabilities and stabilise its financial position.
Similarly, TransNamib, facing operational challenges, will receive N$300 million to support day-to-day operations and address infrastructure needs.
Shiimi said the budget emphasises the importance of these investments in driving economic recovery and addressing sectoral needs.
In the interim, TransNamib is banking on a N$2.6 billion loan co-financed by the Development Bank of Namibia (DBN) and Development Bank of South Africa (DBSA) which will be accessible by the end of 2024, once all requisite processes and conditions are met.
The loan is intended to bail out the financially troubled parastatal and assist it in implementing its turnaround 2023-2028 Integrated Strategic Business Plan.
TransNamib acting CEO of Webster Gonzo highlighted that the national rail operator plans on turning its fortunes from the envisaged procurement of 10 locomotives estimated to cost N$800 million and the remanufacturing of its rolling stock.
Now with an increased number, TransNamib is likely to spend over a billion in aiding and replacing its aging fleet. One locomotive was estimated to cost approximately N$80 million.
Meanwhile, the development of Meatco’s operational turnaround strategy is at an advanced stage.
This comes at a time when the corporation has allegedly been failing to pay 245 commercial livestock farmers N$320 million for cattle delivered to its abattoir as it is facing significant financial challenges, according to a recent organisational review conducted by consultancy firm Ombu Capital.
The review was commissioned by the Development Bank of Namibia (DBN), which had provided a N$200 million loan to the company.
The review found that the combined impacts of low slaughter numbers, rising producer prices, and high fixed overhead costs have put significant pressure on Meatco’s cash reserves and ability to operate on a month-to-month basis.
The report noted that Meatco is currently slaughtering only 2,250 animals per month, far from the 5,000-6,000 required for the company to break even.
To reach this level, the company will need an additional N$192 million in funding, excluding DBN capital and interest repayments. Meatco’s current low throughput is expected to result in a monthly operating loss of N$22 million.
