‘Malawi government dupes taxpayers on tractor deal’
Malawi government, which sought a loan of over K20 billion to buy and import agricultural equipment for smallholder farmers, is said to have duped Malawians as it has sold the equipment, at a loss, to top government officials and affluent private players leaving the taxpayer to clear the loan and the interest.
Government is, however, adamant that it sees nothing wrong with the deal.
The matter came to the fore when People’s Party parliamentarian for Rumphi East, Kamlepo Kalua, demanded to know the whereabouts of the 144 maize shellers and 177 tractors and their components in the just-ended Parliament Meeting.
A statement delivered in Parliament late last week by Minister of Agriculture, Allan Chiyembekeza, confirmed some of Kalua’s accusations that some top government officials, including Transport Minister Francis Kasaila, Speaker of the House Richard Msowoya and private firms such as Mulli Enterprises had benefited from the sale of the tractors.
Kalua repeated the query in an interview on Monday this week where he claimed government had dubiously sold tractors at about K5 million each to top government officials despite buying them at K37 million each.
But Senior Director in the Ministry of Agriculture, Irrigation and Water Development, Bright Kumwembe, while acknowledging that the tractors were sold at a cost price to these top officials, which means government will not get any profits from the sale, dismissed reports to the effect that the tractors were bought at K37 million each.
“Those reports are not true, government bought and sold the tractors at K5.6 million meaning that we (government) have not lost anything,” Kumwembe said in a telephone interview on Monday.
A quick survey of Asian websites selling Sonalika tractors, which is the model government says it bought, such as http://www.alibaba. com,shows the cheapest models going at about K5 million.
On why most of the people who benefited from the project are top government officials, Kumwembe saw nothing wrong stating the tractors were meant to encourage farming among Malawians.
“Those people are bona fide Malawians, and when they saw the advertisement in the papers they applied and after scrutiny qualified for the loans, so I see nothing wrong with the whole issue,” he said.
“But the problem with most people in the country has always been that they do not apply for these things only to start worrying later,” he added.
Kumwembe, however, could not be drawn to comment as to how much money government has recovered from the sale of the equipment.
“As of now I cannot say how much government has recovered so far because the private sector paid in cash while those who qualified in government were given the tractors on loan which is being deducted from their monthly salaries [and deposited] into account number one,” Kumwembe said.
Asked why government set five hectares of land for one to qualify to buy a tractor, Kumwembe said “the idea was to encourage farming among Malawians,” which is hard to swallow as arable land (hectares per person) in Malawi was last measured at 0.23 in 2013, according to the World Bank. This means the offer was for above average Malawians.
When contacted to comment on how much government has recovered so far, Finance spokesperson Nations Msowoya said the Minister of Agriculture made a statement on the processes of the tractor sale in Parliament which was very comprehensive.
“The loan that the government obtained from India catered for many things apart from the tractors. Part of the funds were used for the construction of the sugar factory, oil reserves and tractors,” he said.
Msowoya also agreed with Kumwembe that the price of the tractors was not supposed to be K37 million.
“Even the most expensive tractors don’t cost that much. The price of K5 million is reflective of the landed costs of the tractors including all administrative fees,” he said.
But according to a social media post by economist Henry Kachaje, which he edited and forwarded to us for use, of the K23 billion Malawi used to purchase the tractors and other farm equipment, only K477 million was realised from the sale of the tractors and K131 million from hiring out the rest leaving the tax payer to shoulder and clear a wanton K22.458 billion loan plus interest.
“A few individuals, with the capacity to borrow on their own, have benefited from free tax payers’ money. They now own tractors, while all of us will be repaying the loan of K23billion on their behalf for the next 30 years, from 2017. The poor farmer in the village is back to the hoe. And life goes on.
“This is one of the many examples of how our poor planning and execution of developmental programmes, especially those involving borrowed funds, are making Malawi poorer. We have again gone deeper into national debt on an expense that has not added much economic benefit to the nation as a whole, except to a few individuals. The tax payers will for years be repaying a national debt that in fact only benefited a few economically able individuals,” Said Kachaje.
Kalua also decried the deal and called it ‘full corruption’ and added that it had all the symptoms of insider trading.
“It is why we cannot prosper,” he lamented in a Monday morning phone interview.
Speaker of the National Assembly, Richard Msowoya, said the tractors were sold on open bids and that every ‘Jim and Jack’ was eligible to bid, but he referred the issue to Parliament’s Public Relations Officer, Leonard Mengezi.
Mengezi said the Speaker responded to an advert by government and made the purchase like any other Malawian. He refused to speak on the morality of the purchase, the Speaker not being an average Malawian.
But Kachaje weighed in on Msowoya’s argument saying: “It might be true that the tractors were openly advertised and the Speaker is one of those who got the tractors in a transparent sale process. However, the question still remains whether this was the right thing to do: get a loan from the Indian government in the name of smallholder farmers, then sell them later at extremely low prices to financially and capable people who could have otherwise afforded to get a bank loan to buy the same, then pushing the whole loan repayment to all Malawian taxpayers?”
Kachaje added, in the email response, that Malawi needs to critically scrutinise its growing national debt and examine whether it benefits the wider citizenry.
“In this case of the tractor deal, I am inclined to think we duped the tax-papers by making them shoulder a burden they should not have carried,” wrote Kachaje
– Story by Bright Mhango, Eric Msikiti
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