Admarc in K72 billion debt
The Agricultural Development and Marketing Corporation (Admarc) has accumulated debts of up to K72 billion with commercial banks guaranteed by the Malawi Government.
According to a report submitted to the Agriculture Committee of Parliament, the amount had accumulated as of June 1 2022, with some of the loans going past their maturity dates.
The report says the State-owned grain trader owes FDH Bank an overdraft of about K4.2 billion, which was drawn for salaries and pensions.
Another debt with FDH Bank is a long-term loan for motor vehicles valued at about K172 million and is also long overdue.
The other loans, which are due on June 30 2022 and September 30 2022, are with CDH Bank valued at K13.8 billion and K24.7 billion, which were obtained for crop purchases and social crop purchases, respectively.
The report indicates that these were social short-term loans.
Admarc Board Chairperson Alexander Kusamba Dzonzi confirmed the development in an interview, saying the growing debts have seen revenue of the corporation declining significantly, further crippling most of its operations.
He said the suspended $22 million Zimbabwe maize deal was going to have a substantial impact on reduction of Admarc’s total loan liability.
“It would be giving Admarc and government a breather. It would also build trust with banks that Admarc is not a deliberate defaulter as the monies Admarc would get would also be used in servicing loans we have with banks. Winning the trust and confidence of banks for Admarc is the goal of this board,” Dzonzi said.
He disclosed that the grain trader has another social short-term loan with NBS Bank for maize purchases amounting to K16.5 billion, which is payable by March 31 2023.
Then, there is another commercial long-term loan with Export Development Fund valued at K12.3 billion, also due on March 31 2023, after the monies were used for crop purchases.
“Admarc can only service its loans when it is allowed to do business, which is not the case in the current scenario. You should also realise that, with the Zimbabwe maize contract, Admarc stands to get an extra K3 billion…,” Dzonzi said.
But Sameer Suleman, Chairperson for the Agriculture Committee of Parliament, which directed that the Zimbabwe maize deal be suspended, challenged the government to assume responsibility for the corporation’s debts, saying that is what the law stipulates.
“They can’t be entering into suspicious deals, or flouting procedures, because of the pressure from their creditors. If you read the mandates of Admarc, they are supposed to implement government policies at 100 percent cost recovery.
“So, there is no need to burden Admarc. Government should bear the burden,” he said.
Commenting on the matter, agriculture policy expert Tamani Nkhono Mvula decried that Admarc has, over the years, been turned into a political entity, adding that individuals are benefitting from the mess.
“Admarc should be left to operate as a commercial entity. You see, it obtains commercial loans to deliver on social functions; it doesn’t work that way. Someone should have the guts to let Admarc free and let it be an economic vehicle for the country that it should be,” Mvula said.
Admarc has, in recent weeks, made headlines following an announcement of its intention to sell 100,000 metric tonnes of maize to Zimbabwean firms, raising fears that some procedures were not followed.