Admarc bailout plan irks house

• Committee chair promises rebuff
• Get rid of Admarc—Economist

The Parliamentary Committee on Agriculture and Water Development has threatened to throw out any request to Parliament for a bailout on Admarc’s K22.4 billion loans after President Peter Mutharika has banned maize exports which could have enabled the parastal to repay its loans.

And one of the country’s economists has added his weight to the issue by calling for the disbanding of Admarc, saying the parastatal has failed to live up to its mandate as a commercial entity.

 The committee’s chairperson Joseph Chidanti Malunga in an interview on Friday warned that should government bring Admarc’s bailout issue to Parliament, the opposition would reject it “because it would be unfair to burden taxpayers”.

Malunga said, with promising bumper yield this growing season, there was no harm in allowing maize exports.

He said Admarc has a lot of maize it can sell and realise enough money to repay its loans.

Faced with the presidential directive, the Agricultural Development and Marketing Corporation (Admarc) is left with no choice but to negotiate with the guarantor of the loan government to bail it out on the loans, a development economics professor Ben Kaluwa has said is enough reason to disband the parastatal.

Justifying his point of calling for Admarc’s abolishment, Kaluwa said, in an interview, government’s ban on even commercial farmers from exporting maize was a case in point.

“If government gets rid of Admarc and cooperatives are formed for specific crops they would be able to know among themselves who are legitimate beneficiaries of government’s fertiliser subsidy.

“And if I am a commercial farmer, buying my own seed and fertiliser to grow maize, I should be allowed to sell that maize anywhere I want, even outside Malawi.

If there are restrictions, they must only apply to those that benefited from government’s subsidies,” Kalua said.

He insisted that Admarc, a monopoly in the agriculture sector for a long time, is now an irrelevant player.

Admarc board chairperson James Masumbu said in an interview last week that the corporation would approach government to negotiate how it can be assisted financially to settle its debts.

“We will talk to government, there is a debt we have to clear, so we have no option,” Masumbu said , but referred further questions about the loans to Admarc management.

But the Ministry of Finance , Economic Planning and Development has already nodded to Admarc’s proposal for a bailout, arguing that government guaranteed the loan and should Admarc fail to settle it, the burden lies on Treasury.

The ministry’s spokesperson, Alfred Kutengule, said in an interview on Thursday that while there has been a lot of debate about Admarc as a commercial entity, what must not be forgotten is that the parastatal plays a social responsibility as the commodity it deals with is food.

However, the move to request Treasury to foot Admarc’s loan has riled the Parliamentary Committee on Agriculture and Water Development, which has said it would be a double blow on the taxpayers who, in the first place failed to buy the commodity, because its price was “so exorbitant”, to be expected to bailout Admarc.

Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa said it would be outrageous for Treasury to bail out Admarc.

“Admarc management and board need to be held fully accountable for this as a decision they undertook. We cannot dare sweep such things under the carpet any more. Malawians deserve better,” said Kubalasa.

He said this is why due diligence in the best interest of the nation is needed at every level of decision-making.

On her part, Civil Society Agriculture Network (Cisanet) national coordinator Pamela Kuwali said as a commercial entity, the expectation is that Admarc should be able to use its proceeds to cover costs. “But it is important to note that Admarc is still a public entity whose mandate is to provide service to Malawians, intervene to ensure that prices offered to farmers are competitive and that maize is available at an affordable price for Malawians.

“The State is, therefore, responsible to ensure that Admarc functions and its operations continue. It must be noted that Admarc is only commercial in principle; in reality government owns 99 percent of its shares,” she said.

As a way forward, Kuwali suggested that Admarc must still sell the maize, even at a reduced price, to clear stocks and reduce storage costs that are likely to be accrued if the maize is still kept, and also to avert the risk of the maize getting rotten.

“Proceeds, which obviously will be at a loss, should then be used to pay part of the loan so that the bailout must not be for the whole amount, but the remaining balance,” she said, further urging government to act swiftly towards Admarc reforms.

Recommendations for reforms, Kuwali said, include rethinking the institutional framework of the parastatal by reducing the percentages of shares owned by government; and allowing private ownership of the shares for up to 51 percent.

Kuwali said in future Admarc must not borrow money from banks to fulfil its social function, but government must instead provide in the national budget an allocation, strictly for ensuring that Admarc has enough funds to buy maize for the strategic grain reserves.

Masumbu had earlier disclosed that Admarc, embroiled in maize scam following questionable maize imports from Zambia, was going to sell the maize to Kenya and Tanzania after the two countries, which are faced with food shortages, approached Malawi.

In 2016, the corporation obtained that money from two local banks and used it to buy, locally, about 100 000 tonnes of maize for sale in its depots, but the maize was shunned by Malawians because the price [K12 500] was deemed exorbitant and unaffordable.

 Admarc then decided to sell the maize outside the country to repay the loans, but President Mutharika, on April 5 2017, ordered that no individual or organisation should export the grain.