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Cisanet queries government on admarc loans

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The Civil Society Agriculture Network (Cisanet ) has questioned government’s rationale in guaranteeing the Agricultural Development and Marketing Corporation (Admarc) to borrow money from commercial banks to buy maize.

Members of Parliaments in May approved a motion that Admarc should borrow money amounting to K4 billion from local commercial banks to avert hunger.

However, Cisanet contends that Admarc will likely make a loss out of the loan unless the maize to be procured is sold at a commercial price.

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Cisanet National Director, Tamani Nkhono-Mvula, in an interview observed: “We feel the idea to allow Admarc borrow money from the commercial banks to procure maize is not a good one because Admarc, as has been the case in the past, is likely going to make a loss out of this loan unless the maize to be procured is going to be purely sold back at a commercial price.

“We have to take cognizance of the fact that this loan will be paid back to the commercial banks with interest. What is happening here is that we are financing a national budget with a commercial loan because if government is going to pay back this loan it will use public resources to do so.”

Nkhono-Mvula also said government has in the past guaranteed commercial loans for Admarc but the losses the institution has been making have forced the state to be paying back those loans.

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“Admarc has been making losses because at times it was forced to sell the maize at a non-competitive price, at a price lower for them to break even. In other words, Admarc has been working as a social entity than a commercial one. In that case, the nation has been using commercial loans to support social services, which is not right.

“What should have happened was for Parliament to allocate money in the national budget for NFRA [National Food Reserve Agency] to procure maize and use Admarc as its buying outlet. ADMARC would then have been able to charge a fee for this operation for its administrative and other operational cost.

“This means we would have avoided going to the commercial banks to borrow money to buy maize that we foresee will be sold at non-commercial price. We would have avoided paying back the loan to the bank with interest,” said Nkhono- Mvula.

Minister of Finance, Economic Planning and Development Goodal l Gondwe in his 2015/16 budget statement indicated that about K8.0 billion will be spent on procuring maize this year while an estimated additional amount of K13 billion will be spent during 2015/16.

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