By Isaac Salima:
Over a year after the Agricultural Development and Marketing Corporation (Admarc) unveiled plans that would help it strengthen its financial position, the grain trader continues to struggle in running its operations.
On February 24 2021, Admarc Board Chairperson Alexander Kusamba Dzonzi unveiled what he termed as a ‘turnaround strategy’ that would be bankrolled by a K423 billion loan he claimed to have secured with an unnamed foreign financier.
Among other things, Kusamba Dzonzi hinted that Admarc would establish a textile plant, cooking oil manufacturing firm and start buying fertiliser from outside companies for supply to the flagship Affordable Inputs Programme (AIP).
The board chairperson also announced that they would provide Admarc’s cash-strapped subsidiary, Auction Holdings Limited (AHL) Group, with a K6 billion bailout.
However, a year down the line, the grain trader is still in a tight corner, struggling to run its operations smoothly, largely because the accounts books cannot balance. Admarc itself is saddled with debt.
The baby, AHL Group, it wanted to bail out is on life support machine as, recently, it was forced to retrench 540 employees because of financial challenges. Last week, the-State-owned produce marketer told its employees to expect a delay in their March salaries due to cash flow constraints.
The question is: What went wrong?
Kusamba Dzonzi points a finger at the Ministry of Finance for not supporting them in the plans.
“We did find the financiers at that time and, in line with the country’s laws, we submitted our arrangements to the government to look into the issue. The Finance Ministry later made a decision not to allow us to borrow [money] from outside.
“Remember, we also had plans to procure fertiliser to supply [to] the AIP but, after the ministry refused to give us permission to get the loan, you have seen what has happened in the AIP,” Kusamba Dzonzi said.
He added that they would engage the Ministry of Finance for discussions on how to go about it.
“The President [Lazarus Chakwera] still desires that Admarc finds money cheaply as opposed to borrowing from local banks. Now that we have a new Minister of Finance, we are yet to engage him to see how best he can assist us,” he said.
Finance Minister Sosten Gwengwe said Admarc’s balance sheet could not convince financiers.
“I would be the happiest person if Admarc could get a financier who is ready to sponsor them. Their main problem is the balance sheet, which is scaring away potential financiers. We would not stand in their way if they had a financier who is ready to support them,” Gwengwe said.
A report presented to Parliament last week indicated that Admarc has an outstanding loan amounting to K64 billion with local banks. The report further indicated that the corporation would like the government to settle the loans for Admarc to clear its balance sheet.
The report said Admarc needs about K187 billion for crop and fertiliser purchases this year.
It adds that the corporation has not been doing well as its trading revenue continues to decline. Five years ago, the report shows, Admarc could make a trading revenue of K25 million but, in the financial year 2021-22, it realised only K5 million.
The corporation’s general manager Rhino Chiphiko said last week that they were working on plans to sell about 250,000 metric tonnes of maize outside the country in order to raise money for loan repayments.
He said this year’s crop estimates indicate that the country would have excess yield, hence their decision.