From left to right: BKB wool general manager Isak Staats, Modiano
CEO Andrew Pape,BKB director Andre du Toit and former BKB Director Eddie
and Ts’epo Heqoa
It has been almost a year since farmers have shed their mohair and almost seven months since they shed their wool, nonetheless up to now, not all have received their due income. Endeavours have been made and are continuously being made to help Basotho men and women to get their income and rescue them from the already existing and foreseen insinuating poverty. The Legislation committee of the Upper house in the Parliament of Lesotho (commonly known as Senate house), in attempt to resolve the wool and mohair saga, invited BKB limited which has been a broker for Lesotho wool and mohair growers for over 44 years to engage in a discussion about the prevailing circumstances in the country. The chairman of the Legislative committee, Hon. Chief Peete Lesaoana Peete said that the reason that they invited BKB to engage in the open discussion is because of the interest of the nation and farming community at large and their role as the Legislative committee which is to investigate whether any law that is formulated by the National Assembly is in the interest of the community or not.
The forum consisted of invited guests from BKB: Isak Staats (General Manager, Wool), Andre du Toit (Director) and Eddie Prinsloo (Former BKB director, Director and Breeder Principal Smithfield). South African Wool and Mohair Buyers Association (SAWAMBA) was also represented by Anrew Pape (CEO, Modiano; which is the largest buyer of Lesotho wool clip). Members of the Legislative committee, other Senate members, members of the Lesotho National Wool and Mohair Growers Association and representative of the Traders’ committee were also present. Isak Staats started by giving the background of BKB Limited and went further to tackle the issue of Withholding VAT of which was reported by most of the media press since 2018. On the 19th January 2018, Lesotho Revenue Authority (LRA) claimed that BKB owes about M10 332 070.92 in relation to withholding VAT assessment and this resulted in the bank account of BKB being frozen. Following these allegations, BKB consulted auditors in Lesotho who verified that BKB has been trading within the standards of the Tax law and therefore they do not owe any tax to LRA.
Besides that, they also went further to consult with attorneys in Lesotho which also confirmed that they are operating within tax governing laws. BKB in front of the members of the Senate therefore firmly denied those allegations that they owe tax to LRA and suggested that the government should revisit the tax regulations and if they have any grievances they should at least negotiate with the government of South Africa under SACU, since they are just traders who operate under the given laws, they are unable to formulate any law for themselves. Furthermore Stats continued to say that it would be very difficult for BKB to establish their company in Lesotho as the government of Lesotho suggested.
He said this is due to the high costs that need to be incurred during the setting up of an auction facility since wool and mohair industry is a complex facility that requires a lot of skills and expertise. For example, he mentioned that to test the fibre they would require a laboratory which is very expensive to build and would also need accreditation before being internationally recognised. Moreover, they pointed out that it would also be a challenge to attract buyers to attend the auction for 5 000 000kg wool and 600 000kg mohair which is a very small amount in comparison to what is sold at The Exchange where both Lesotho and South Africa have a platform. When considering all these factors, it would therefore be a loss to them as a company since the return will be smaller than the invested amount.
The Chairman of the Legislative Committee of the Upper House,
Hon. Chief Peete Lesaoana Peete
The impact caused by regulations that prohibit the export of the wool and the mohair may seem to be to a lesser extent, but when we started engaging with some of the farmers and other role players in the wool and mohair industry, we were aware that the catastrophe may be bigger than can be estimated. In particular, the chairman of LNWMGA Mr Mokoenihi Thinyane and a representative of the Trader’s committee Dr Moteane highlighted some of the following negative effects facing Lesotho that they have observed:
- 3 Billion that was supposed to be received by farmers as annual revenue did not get into the fiscal system of the country’s economy, hence weak economy which is worse in rural households.
- 234 734 people (according to LNWMGA statistics) who are sustained by wool and mohair income are living in poverty.
- 2 360 people who were hired by LNWMGA to work at sheering sheds have lost their jobs
- No dipping levy has been received by LNWMGA to buy medicine for dipping, therefore possible outbreak of Sheep scab if it has not already attacked some of the animals.
- Loss of herds due to farmers eating their flock which may lead to long term poverty as number of sheep to be sheered will be reduced.
- Possible outbreak of many other diseases as a result of lack of funds to buy medicine.
- Overcrowding in Maseru and other towns as many people have lost their jobs and possibility of increased crime rate.
- Further loss of rangelands as a result of overgrazing because farmers have no funds for buying supplementary feed for animals.
- Degrading wool and mohair quality due to starvation on herds.
- According to Andrew Pape (representing wool and mohair buyers), Lesotho will permanently lose the market as buyers will find other types of fibre instead of mohair to carry out their production.
In conclusion, the cry of the wool and mohair growers is that they have not yet received their income for the 2018 wool and mohair clip and it is said that this is because not all the wool has been sold while there is not even a kg of mohair that is sold.
This is a sad situation since some of the farmers started sheering in August 2018 but six months have passed and they have only received very little or no income at all. On the contrary, in the previous years when BKB used to be a broker, it would take 12–15 weeks from the time of sheering for farmers to get their income.