Parastatals post mixed results

Parastatal organisations have posted mixed performance results in the year ending June 2014 with cash-strapped State produce trader Admarc incurring a record K906 million loss while, in contrast, power utility Escom made a profit-after-tax of K9.9 billion.
The Agriculture Development and Marketing Corporation (Admarc) loss comes against the background of another after-tax-loss of K1.5 billion as of June 2013.
Revelations of Admarc’s poor performance is contained in the 2015 government annual report prepared by the Ministry of Finance, Economic Planning and Development.

Policy analysts have since expressed worry with Admarc’s continued poor performance.
Social economic analysts Alex Nkosi yesterday demanded ‘pragmatic’ reforms on Admarc to enable the embattled institution reclaim its lost glory.
Said Nkosi: “It is clear that the institution has lost direction. There was a time when it [Admarc] stocked maize during lean season and sell it at affordable price. It has now lost its social protection role and is not serving Malawians any better.”
Catholic Commission for Justice and Peace (CCJP) national secretary Chris Chisoni also wondered whether the parastatal would stand strong in carrying out its defined role in the contemporary world and fairly compete with the private sector.
He asked government to clearly spell out the future of Admarc which, he said, has been hanging by the thread for a long time now.
In a telephone interview yesterday, Admarc chief executive officer Foster Mulumbe sounded optimistic, banking hope that last week’s passing of a resolution by Parliament to allow Admarc borrow from commercial banks is one key solution to the parastatal’s woes.
He said: “And the Minister of Finance has also set aside K4 billion to enable Admarc buy crops in good time, all these are solutions to our problems, which we have been facing.”
But Civil Society Agriculture Network (CisaNet) executive director Tamani Nkhono-Mvula yesterday faulted the idea by government to give Admarc K4 billion, projecting that the corporation is likely to make a loss out of the loan “unless the maize to be procured is going to be purely sold back at a commercial price.”
He said government has in the past guaranteed commercial loans for Admarc, but still the institution has been incurring huge losses, thereby forcing government to be paying back those loans.
The economic report says substantial costs still remain high, thereby continuing to reduce the corporation’s ability to compete successfully with the private sector.
Currently, the corporation no longer receives subventions from the national budget that used to beef up its working capital.
But despite that, government still requires Admarc to continue providing social functions through pan-territorial and pan-seasonal marketing services in all parts of the country.
Reads the report: “Therefore, there is need to assess the best way by which the company should be structured operationally and financially for its survival.”
While Admarc and others are wobbling financially, other statutory corporations are shining with good results.
During the period under review, Electricity Supply Corporation of Malawi (Escom) continued to register good results, reporting a K9.9 billion after another robust performance of K5 billion in 2013.
Malawi Communications Regulatory Authority (Macra) also registered a 100 percent profit after tax of K6.6 billion from a profit of K3.3 billion in 2013.
Other star performers include Southern Region Water Board (SRWB) with K265.9 million, Lilongwe Water Board (LWB) with K389 million, Northern Region Water Board (NRWB) with K3.4 billion and Airport Developments Limited (ADL) at K159.2 million.
However, joining Admarc among poor performers are Malawi Housing Corporation (MHC), which posted a K42.6 million loss and Blantyre Water Board (BWB) with a loss of K424.6 million, according to the report.
The results have come at a time Vice-President Saulos Chilima and the Public Service Reforms Commission have been meeting parastatals to find the way forward to turnaround performance of mostly perennial underperformers.
During the meetings, political interference stood out as one of the factors hampering performance.