MALAWI – Malawian state-owned produce trader, Agricultural Development and Marketing Corporation (ADMARC) is seeking US$ 300 million (about K222 billion) to be sourced through Parliament for recapitalisation to ensure seamless and profitable operations.
The move was revealed by ADMARC’s acting Chief Executive Officer Felix Jumbe, during the parastatal’s meeting with four parliamentary committees: Agriculture and Food Security, Budget and Finance, Industry and Trade and Public Accounts, reports The Nation Malawi.
The financing is in addition to the K100 billion (US$135.2m) loan Admarc wants to borrow from Export Development Fund (EDF), a development finance institution, to revamp itself as a serious business entity as Treasury capital injection alone is not enough.
Jumbe said government, as a majority shareholder, cannot manage such huge capital injection; hence, external financing would be ideal through Parliament’s Loan Authorisation Bill.
The funding will be utilized to finance the purchase of maize and cash crops from small-scale farmers and enable trade of at least 500, 000 metric tonnes of maize on commercial basis to ensure commercial visibility of the corporation.
“We can raise money on our own as a limited company, but that will be limited to our assets that we can pledge as collateral for loans. Alternatively, we can raise capital through listing on Malawi Stock Exchange if government relinquishes current 99 percent of its shares to the public,” Juma stated.
Speaking on behalf of the parliamentary committees, Agriculture and Food Security Committee chairperson Ulemu Chilapondwa said they support Admarc’s resolve for recapitalisation, adding that farmers are suffering because of the institution’s inefficiencies and lack of sound capital.
“The institution needs to be operational all year round to buy farm produce from farmers at minimum prices and also to be selling farm inputs to farmers,” he said.
Admarc has been allocated K10 billion for the purchase of maize, legumes and cotton in the 2020/21 National Budget with a provision to borrow more capital from commercial institutions.
Admarc’s plan to buy 600 000 metric tonnes (MT) this year, with the remaining tonnage of about 150 000 MT to be sold to private companies that use maize as a raw material for production.