Botswana and South Africa stand to jointly suffer the loss of at least 2,000 jobs following the liquidation in Southern Africa of Hyundai Motor Distributors, industry sources told IRIN this week.
The Motor Company of Botswana, which owns Hyundai’s assembly plant in Gaborone, employs about 900 workers, while Hyundai Motor Distributors (HMD), sells the cars through its dealerships in South Africa. Last week, their creditors, the Botswana Development Corporation (BDC) applied for liquidation following its exposure to US $23 million debt in Hyundai operations. Botswana’s First National Bank’s exposure was US $9 million.
In South Africa, Wheels of Africa, the holding company of Hyundai Motors also successfully applied for the liquidation of 52 new car dealerships, 14 used car dealers and 34 service stations. Billy Rautenbach, the head of the holding company, said in court papers that the HMD financial backers had withdrawn their support after the company’s liabilities were shown to exceed its assets.
Rautenbach is under investigation on fraud and theft charges in South Africa, and analysts believe Hyundai’s collapse might be a direct result of this probe. A Botswana-based economist told IRIN: “Hyundai’s collapse can be linked to the criminal investigations into Rautenbach’s business dealings. This situation has made some people and institutions in Botswana uncomfortable to be associated with him.” The economist added that this might partly explain why the BDC decided to have the company liquidated.
A BDC manager told IRIN that the liquidation of Hyundai will have a negative consequences for workers who would lose their jobs. “In a country where the unemployment rate is at 20 percent, it is unfortunate that more workers stand to lose their jobs,” said Batlang Mmualefe, BDC’s research and public relations manager.
A trade union official of Botswana’s Commercial and General Workers Union told IRIN: “The liquidators will firstly settle the company’s debts before considering the workers severance packages.” He added that in most liquidation cases the workers are paid out last and usually receive a pittance. “As there are no unemployment benefits for workers who lose their jobs, their survival will depend on the severance packages they will receive when they are retrenched. Chances of finding jobs elsewhere in the economy are very slim.”