The loss-making Malawi Posts Corporation (MPC) has obtained a K700 million bank loan using its office complex in Blantyre as collateral to buy seven buses from China, Nation on Sunday can report.
Both MPC and Treasury have confirmed the development with MPC saying it attached the office complex to meet the loan requirement while Treasury says it expects the parastatal to repay the loan without relying on government.
The procured buses, expected in the country in few weeks’ time, are part of MPC’s business plan to expand its revenue base.
Over a week ago, during a visit by minister responsible Mark Bottomani, Postmaster General Henry Shamu said MPC is losing at least K500 million per year due to some loss-making post offices. He said the corporation has 180 post offices, but only 30 are making profits.
“We have to be innovative to remain relevant on the market; hence, the purchase of the buses, which will start operating next month. We hope that our services will be unique because we will be able to deliver mails same day and offer customers comfortable travel,” said Shamu at the meeting with the minister.
Treasury spokesperson Davis Sado said government approved MPC’s request after a thorough analysis of the business plan. He said repayment of the loan is solely a responsibility of the parastatal, and not Treasury.
“After making the analysis, we saw that the presentation which they made to government and the revenue measure was viable, but the consent which was given is in line with Section 73 of the Public Finance Management Act (2003)…That the consent is granted on the understanding that MPC shall service the loan facility without recourse to Treasury,” he said.
Section 73 of the Act states: “A statutory body may, with the prior written approval of the Minister, borrow for its purposes, by overdraft, within such limits as the Minister approves, and there shall be no liability attached to the State or Government by virtue only of the approval of the Minister”.
The same law says a statutory body cannot give a guarantee to the bank without a written approval of the minister, meaning MPC has the blessing of government to use its office complex as collateral.
“Before giving approval of a statutory body giving a guarantee, the Minister shall first ascertain from the Secretary to the Treasury the financial implications on Government of the statutory body giving the guarantee, and ensure that the giving of the guarantee is in the public interest,” further reads Section 74 of the same Act.
Five years ago, MPC operated minibuses for courier and passenger services, but the business flopped, according to a source within the organisation. The source said the minibuses were posting losses hence they were disposed of.
MPC public relations officer Ida Nkolimbo confirmed that they are no longer operating the minibuses, but expressed optimism that their new bus business is viable and that they will be able to repay the loan in three years.
“As a commercial institution, we are currently operating a courier business which operates on purely business principles. The post bus falls under the courier service. As a commercial organisation, we have to repay our loans. Government gave us consent to borrow after it was convinced that we would be able to repay the loan,” she said. n