Government in K75 billion loan for Admarc maize
Government is processing a U$105 million loan (about K75 billion in current exchange rate) through American financial giant JP Morgan Chase for Admarc to import 300,000 metric tonnes of maize, Malawi News has learnt.
This loan has a 2 percent repayment rate and will run for 14 years which include a grace period of four years.
The tonnage from this loan is part of the 490,000 metric tonnes which will be made available to Admarc over a period of five months.
According to the information we have seen, the JP Morgan Chase line of credit is one of several which the government is undertaking for the purpose of maize procurement in its response to the dire food situation in the country.
The government has also established a line of credit with the PTA Bank to finance the importation by Admarc of 100,000 metric tonnes of maize from Zambia.
It has also provided two bank guarantees to CDH Investment Bank for the procurement of an estimated 90,000 metric tonnes of maize on the local market.
However sources within government say Minister of Finance Goodall Gondwe is at the heart of the transactions such that they are being done without well known loan procurement procedures, raising the spectre of the impacts of lack of transparency and accountability.
As we went to press, Gondwe was outside the country and Treasury spokesperson Nations Msowoya withdrew his comments he gave on Thursday and said on Friday “may be it can go without our comments.”
“Wait for the Minister to come back then you can speak to him. That’s why I was asking for more time.”
Last year, Admarc also bought maize after getting a loan and Admarc’s Chief Executive Officer Foster Mulumbe said the loan was repaid.
Mulumbe also said the local purchase of maize needed no procurement policy as Admarc is buying from small scale farmers.
“If we are buying in rural areas do we need to tender? Some bring as little as 10 kg,” he said.
But he said the international acquisition of the staple grain has a no objection from the Office of the Director of Public Procurement.
According to the 2016/17 Food Insecurity Response Plan which President Peter Mutharika launched last month, up to 6.5 million Malawians are in need of humanitarian food aid.
Malawi’s desperate food situation has emanated largely from severe prolonged dry spell in most parts of the country in the 2015/16 growing season.
This has resulted in 2.4 million farmers completely losing their production and 975,000 children and women being in need of nutrition. Up to 24 of the country’s 28 districts have been affected and therefore in need of assistance.
At the time of the launch of the plan, financial requirements for the response were pegged at US$307m. At that point, only US$ 64.2 million constituted confirmed pledges, leaving a resource gap of US$243 million.
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