Agriculture Minister George Chaponda is fuming wigh anger against Goodall Gondwe, Minister of Finance and Economic Planning for continueing to get involved in direct procurement of maize for over a K7.5 billion deal despite Cabinet rejection.
Chaponda is also not amused that Gondwe is sidestepping him in procuring the grain and not the responsible ministry.
Gondwe has procured maize directly from outside Malawi by signing contracts on behald of Agricultural Marketing and Development Corporation (Admarc) to get 300,000 metric tonnes.
But Chaponda feels Gondwe is procuring maize “unilaterally” and that it is “against the set rules.”
Cabinet rejected a K7.5 billion governments’maize deal after donors raised eyebrows as Treasury was dealing with a foreign intermediary company amid fears of overpricing.
The decision to purchase about 100 000 metric tonnes of maize came after government announced that 6.5 million people in the country will face hunger this year due to low maize harvests in the 2015/16 as a result of the prolonged dry spell which reduced maize yields by 39 percent.
Gondwe is dealing with Dubai-based intermediary called Eurostar Trading Company.
Cabinet reaised questions over the company’s capacity after it turned out that the company was to obtain a $105 million loan from the PTA Bank to procure the maize on behalf of government to be repaid at 2 percent interest up to 2018.
Treasury was supposed to act as guarantor of the loan.
The deal is “Cashgate-like” with concerns of overpricing for purposes of wrongful self-enrichment.
The maize is to be purchased for State grain marketer Agricultural Development and Marketing Corporation (Admarc).
But Gondwe has defended the deal said Treasury had done “due diligence”.
This development comes after newspaper reports indicated that 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.
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.
Malawi News reported that 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.