Africa-Press – Malawi. Malawi Government signed a sovereign guarantee for Auzano Capital Management Ltd, a United Kingdom based which is 10 months old, to provide US$170 million (about K176 billion) for procurement of 350,000 metric tonnes of fertilizer.
According to documents seen by Malawi24, government-owned Smallholder Farmers Fertilizer Revolving Fund of Malawi (SFFRFM) in September this year agreed to borrow US$170 million from Auzano to finance procurement and transportation of fertilizer for the 2022/23 farming season.
In the national budget, US$97 million was allocated for the 2022/23 AIP but government estimated that US$217 million would be needed for the program. According to an agreement between SFRFRM and Auzano and signed for SFFRFM by chief executive officer Richard Chikunkhuzeni in September this year, financing from Auzano was aimed at covering the funding gap for the AIP.
Malawi Government agreed to act as a guarantor for the deal, agreeing to repay the money as well as interests and other fees and charges in case SFFRFM fails to repay.
A draft government guarantee which was set to be signed by Minister of Finance Sosten Gwengwe shows that Malawi Government agreed to repay the loan in case of SFFRFM defaulting.
“In the event of a default to pay, upon AUZANO CAPITAL MANAGEMENT LTD giving us written demand through the Secretary to Treasury with a copy to the Governor of the Reserve Bank of Malawi (herein “the Demand”), payment by us of the principal amount in the sum of US$170,000,000.00 (One Hundred Seventy Million United States Dollars only) or any part thereof and interest thereon and any liabilities arising in connection with the Facility including the default interest and other banking charges (herein “the Outstanding Amount”).
“We guarantee to pay you the Outstanding Amount within 90 days of receipt of such Demand and interest at such rate per annum as is due and payable under the Facility agreement and remain unpaid from the date of the Demand until payment of all monies obligation and liabilities.
“In this regard, the Reserve Bank of Malawi shall process payment of the required amount upon receiving written instruction from the Secretary to the Treasury,” reads part of the draft guarantee document.
Meanwhile, it has emerged that the funder, Auzano Capital Management Ltd, a limited liability company incorporated and registered in England, has one director and its capacity to raise such billion of Kwacha is questionable.
The United Kingdom’s Companies House website lists its director as 38-year-old Zimbabwean national identified as Tatenda Muvirimi Kupara. There are no other directors for the company which was only registered in November, 2021.
There are suspicions of fraud as this year Government also paid US$727,000 (K750 million) to a UK based meat company which posed as a fertilizer supplier. The money was paid by SFFRFM as advance payment for procurement of fertilizer under AIP. Malawi Government is yet to recover the money.
“Why are we always dealing with these dubious financiers and not the established and well known ones? What is motivating us to go kwa (to) Auzano Capital Management?,” asked social commentator Joshua Chisa Mbele.
Meanwhile, Finance Minister Sosten Gwengwe has admitted in Parliament today that a $170 million sovereign guarantee was given to the UK-based Auzano Capital Management.
According to Gwengwe, the sovereign guarantee was issued with the blessing of the cabinet and was meant for procurement of fertilizer to be used for commercial purposes.
Gwengwe further claimed that the contract that is currently circulating on social media is not what he signed, saying the guarantee which he signed was tightened by inserting a clause that the guarantee only becomes effective when the fertilizer is delivered in Malawi.
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