In the maize scandal

Tom Sangala January 21, 2017

343 2 minutes read

Agricultural Development and Marketing Corporation (Admarc) did not do any due diligence on possible suppliers of maize from Zambia as it has emerged that the Zambia Cooperation Federation (ZCF) which it approached after cancelling a contract with Kaloswe Couriers did also not have the grain.

ZCF instead relied on scouting for the maize and some of the suppliers that have supplied the maize so far are local companies from Malawi.

A local supplier said in confidence that Admarc’s decision to buy from Zambia surprised some local companies who wondered why they were sidelined when they had stocks of maize right here in Malawi.

ZCF jumped into the supply of maize deal even when they knew they did not have the maize because the company wanted to raise money to raise operational funds for the federation.

Media reports in Zambia quoted ZCF Director General James Chirwa confirming that the federation had no maize and that it had only bought 8 000 metric tonnes of maize from small scale farmers by October last year.

The federation had nodded to export 100, 000 tonnes to Malawi.

“You see we have gone into this maize purchase and maize sale also…a very painful decision that we had to make, we were to buy the maize and sell it so that we can raise operational funds for the institution to be able to buy the maize to feed into the milling plants,” Chirwa was quoted.

In an interview yesterday, one of the local companies in Malawi confirmed that ZCF had no maize as the company hunted for suppliers from China, Malawi, Zambia and Tanzania among other countries to execute the contract it signed with Admarc for the supply of 100,000 metric tonnes maize.

So far only 4,210 metric have been supplied (if one chooses to believe Malawi Revenue Authority as Admarc puts the figure at 4,512 metric tonnes).

The company supplied 1 300 tonnes to Admarc through ZCF.

“Today Malawian traders have maize stuck in Zambia after the ban to export maize from that country. We managed to deliver the 1 300 tonnes because it was under ZCF and we were stopped from supplying more after 31 December last when the contract expired,” the official said.

Admarc Chief Executive Officer Forster Mulumbe yesterday admitted in an interview that both ZCF and Kaloswe Couriers had no maize when they went into contract with the parastatal.

Mulumbe admitted further that Admarc was fooled as the two companies lied to the corporation.

He said: “Both Kaloswe and ZCF did not have the maize from the look of things. ZCF said they would act as a market for the cooperatives under their umbrella. We went to ZCF after the contract with Kaloswe fell apart, after they lied to us that they had the maize and they could not even tell us the source of their maize.”

Mulumbe also admitted that Admarc did not do due diligence to ascertain the capacity of ZCF arguing it was because Admarc had to continue with Kaloswe’s contract but now under ZCF.

Asked why Admarc did not source maize locally as companies in Malawi challenge that they have a lot of maize, Mulumbe said the PTA Bank could not pay a local supplier.

“PTA Bank would not pay Admarc. They would not issue LC [Letter of Credit] to a local supplier,” said Mulumbe.

The maize purchase has rocked the country with fears that money may have changed hands and that the involvement of middlemen is responsible for the high price the maize is selling in Admarc markets.

Admarc is selling the staple grain at K12,500 per 50kg bag, a price which is considered prohibitive to the very Malawians the purchase was intended to support.

In response to the food crisis in the country, government planned to purchase about 100,000 metric of maize from Zambia but the deal fell through as Zambia did not have that much supply.

Currently, the maize Admarc is selling in its markets is largely from local suppliers.

Government acted as a guarantor for Admarc to borrow $34 million (about K26 billion) from PTA to buy the maize.

The controversy surrounding the purchase has led to investigations by the Anti-Corruption Bureau, Presidential Commission of Inquiry, Consumers Association of Malawi and Public Accounts Committee which is working together with Parliamentary Committee on Agriculture.