Britain demands answers on loan programme

British High Commissioner Michael Nevin says government should explain how it will finance the Farm Input Loan Programme (FILP), arguing that funding for the programme could affect the budget.

The concerns come against the background of revelations that government has spent K25.4 billion to buy 75 000 metric tonnes of fertiliser for the programme outside the budget, meaning that the expenditure is illegal because Parliament did not approve it.

Nevin told Nation on Sunday in Lilongwe on Thursday that Britain has been pushing government to provide details on how FILP is being financed and administered, but the Joyce Banda administration has not been forthcoming with answers.

This is the second time in three days for Britain to ratchet up pressure on Malawi to explain its decisions.

On Friday, Nevin said government needs to provide information on the sale of the presidential jet after Nation on Sunday revealed that President Banda has been using the plane after it was sold.

“Because confidence has been damaged with cashgate, it is really important that there is transparency that applies to the Farm Input Loan Programme. A loan programme could be a good initiative, but despite asking government many times for details we still do not understand how this is being financed and what liabilities are to the budget this year or next,” said Nevin.

He said in principle FILP could be good for the country, but lack of transparency on the programme could affect its implementation.

According to Nevin, Britain also welcomes the debate on the future of the Farm Input Subsidy Programme (FISP), adding that the problems that have blighted subsidy programmes in the country should be resolved to make them credible and sustainable.

According to a World Bank study, 57 percent of the people who receive coupons for the fertiliser are not eligible because they are not poor. The study found that most beneficiaries are connected people in authority.

In terms of this year’s 1.6 million beneficiaries, what this means is that 900 000 do not qualify for the cheap and heavily subsidised farm inputs.

The British envoy also said Malawi needs to think seriously about the future of agricultural production.

“We hope that any party that wins the forthcoming tripartite elections will be considering how best to move Malawi to a better position in agriculture. There has to be some way of helping those who genuinely need farm inputs,” said Nevin.

Chief executive officer of the Farmers Union of Malawi (FUM) Prince Kapondamgaga agreed with Nevin that the lack of information on FILP will make the programme difficult to implement.

“We would like to know how government is involving stakeholders such as the private sector, civil society, transporters and other key players. While other programmes such as FISP have a national task force which spearheads programme implementation, very little is known as to the level of involvement of other stakeholders in FILP,” said Kapondamgaga.

He said FUM fears that poor repayment could hobble the programme after the May elections as people may view the loans as a campaign tool.

“FUM foresees danger of non-repayment as was the case in 1992 when government gave out loans to farmers, but when government changed no effort was made to recover the loans,” said Kapondamgaga.

Minister of Information Brown Mpinganjira could not be reached for comment.

But Principal Secretary in the Ministry of Agriculture and Food Security Jeff Luhanga said government is committed to providing the relevant information on FILP to all stakeholders.

“We have had training for journalists from all media houses on FILP. On top of that, we also had press conferences to make sure that the information is relayed to our farmers and other stakeholders. On the issue of budgets, I may not be competent enough to comment on it. Please talk to Ministry of Finance,” said Luhanga.

Ministry of Finance spokesperson Nations Msoyowa was unavailable for comment.

Minister of Finance Maxwell Mkwezalamba could also not be reached to comment on the issue.

But in October government said the K25.4 billion used to buy FILP fertiliser is not in the current budget, but will be included in the 2014/15 fiscal year.

At the time she was announcing the introduction of the programme in April 2013, President Banda said FILP is meant to help poor farming families who cannot be included in FISP, but government later said the loans are for people who have other sources of income.