Government owes cash-strapped Agricultural Development and Marketing Corporation (Admarc) K23 billion, the State-owned grain trader has said in a report submitted to Parliament.
The funds, according to the report, are in unsettled claims for agency and social functions Admarc carried out in the 2020-22 financial year.
The report states that Admarc last received funds from the government for agency functions in January 2021 related to the 2019-20 claims which were discounted from K12 billion to K9 billion.
The K9 billion was, however, split between the corporation and Auction Holdings Limited, which was struggling to pay salaries following the government’s directive.
“Current business has been restricted to non-profit operations with limited resources for profitable operations; in addition, Admarc experiences delays in government honouring its claims for agency functions,” the report reads.
But Minister of Finance Sosten Gwengwe said in a telephone interview that the K23 billion issue was resolved in 2021 and referred us to Budget Director Loyce Chilimsungwi for further details.
Chilimsungwi said in a separate interview that Admarc was not being honest about its claims.
“We paid them the first instalment and we are waiting for auditors to verify the balance,” the budget director said.
Asked to clarify on the said agency and social functions, Admarc Board Chairperson Alexander Kusamba Dzonzi said the State-owned grain trader has a mandate to implement government policies at 100 percent cost recovery.
He said, for instance, if Admarc borrows funds in fulfilment of such a mandate like buying maize, if the proceeds from selling the grain do not suffice to cover the loan obligations, it is the duty of the government to cover it.
“It is true that government owes Admarc K23 billion agency fees of which only K10 billion has been audited by the National Audit Office. This money emanates from various activities done by Admarc on behalf of government and some of these fees date back to the 2020 crop season.
“Traditionally, the government has been reluctant to pay Admarc, much as it expects Admarc to deliver on its mandate. But who delivers when their liquidity is sat on?” Dzonzi queried.
He said following government’s failure to honour the claim, the corporation has this year failed to buy crops such as groundnuts, beans, soya beans, rice and pigeon peas from smallholder farmers.
In the report, Admarc indicated that it needed about K21.8 billion to purchase budgeted commercial crops this year.
“If government, especially the Ministry of Finance stops playing politics with Admarc and restrain themselves from politics of lip service, Admarc can be revamped in no time… Admarc itself has internal cartels which are milking and suffocating it too,” Dzonzi said.
The matter comes at a time Admarc has been embroiled in a controversial $22 million maize export deal to Zimbabwe, which has so far been suspended.
Following the suspension of all maize exports on account of possible hunger, Admarc asked government to, instead, buy all its maize and keep it at the National Food Reserve Agency.
In an earlier interview, Dzonzi said the company has to repay its loans, satisfy collateral obligations and warehousing management costs on top of paying their staff.
“In this case, what we will ask is that government should buy the maize and keep it at the National Food Reserve Agency or else we will continue accruing more debts.
“We need to get other loans to buy maize from smallholder farmers this year and the banks cannot give us the loans if we do not meet our current obligations,” Dzonzi said.
Meanwhile, agriculture policy expert Tamani Nkhono Mvula has called for political will and restructuring of Admarc’s shareholding if the institution is to get back onto its feet.