Africa-Press – Malawi. It never rains but pours for State-run Agricultural Development and Marketing Corporation (Admarc) following revelations that the parastatal is looking for a K64 billion bailout package before it starts implementing its turnaround strategy.
A performance report that the company presented to the Parliamentary Committee on Agriculture recently shows that the parastatal owes NBS Bank K15.5 billion acquired for maize purchases recently and a stack of old loans amounting to K47.7 billion.
The K47 billion includes K22.4 billion maize loan from CDH Investment Bank and another K12 billion for maize and other crops, K9.5 billion cotton loan from the Export Development Fund and K3.8 billion for FDH bank.
However, the firm plans to commence implementation of a turnaround strategy by putting K120 million for feasibility studies for projects expected to expand its agro-processing and value addition activities.
The projects include maize flour milling pegged at K3.7 billion, seed multiplication at K800 million, rice milling at K1 billion, edible oil production at K2 billion, cotton ginning at K60 million and dahl processing at K150 million.
In a recent interview, Admarc General Manager Rinho Chiphiko said K12 billion out of the K64 billion was interest. “The major problem is the condition of these loans. Theinterest rates are very high; we are looking at about 18 percent. Right now our loans will attract an amount worth K12 billion.
“But in addition all these loans come with certain conditions of collateral arrangement; so, we also pay for collateral fees. These banks deploy their own people to our depots to look after the maize; so, Admarc covers all costs for these people. So, on a monthly basis, Admarc pays a lot of money in terms of salaries for these people. Another thing is the product that we borrow money for is not a profitable product and that is where the major problem is,” Chiphiko said.
In an interview, agriculture expert Tamani Nkhono Mvula said the problem has been government controlling the entity and using it for social functions.
“Most of the loans are not used for purely business-related functions, now if a bank loan is being used for social functions, we should know that, at the end of the day that company will make a loss.
“The problem is that government uses Admarc for social functions and does not subsidise such activities. What we need to do is to amend the Admarc Act to control how the government uses Admarc. Its management should not come from government so that it operates independently,” Nkhono Mvula said.
Admarc has been grappling for years and in 2017, the Treasury bailed it out with K45.2 billion after it failed to repay loans it got to buy maize which it failed to sell.
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