Malawi’s new administration of Arthur Peter Mutharika has suspended the loan facility introduced by his predecessor Joyce Banda because of the numerous legal and financial problems discovered in the programme.
The Farm Input Loan Programme (FILP) which was run parallel to the national Farm Inputs Subsidy Program (FISP) attracted criticism as to who the loan was targeting with some suspecting that it might be a ploy to reward political party sympathizers.
In his 2014/2015 budget statement Minister of Finance, Economic Planning and Development Goodall Gondwe disclosed that the new government discovered that suppliers of the 75,000 metric tonnes of fertilizer for the programme are yet to get paid and also almost 42,000 metric tonnes is still in suppliers warehouses.
Gondwe also said that another anomaly with the facility was that the fertilizer was bought on credit basis without Parliamentary approval and “does not appear to have been sanctioned by the Treasury”.
“Of the 75,000 metric tons, only 32,500 metric tons was distributed to the farmers leaving a balance of 42,500 metric tons currently in the distributor’s warehouses. The fertiliser suppliers and warehouse owners are yet to be paid the cost of the fertilisers and storage charges respectively,” he said.
Gondwe said the outstanding payments to the suppliers and distributors are part of the arrears that have been recently reported as part of government debt burden.
The FILP was a loan programme introduced by the previous administration to assist farmers who were not targeted through FISP but were assessed to have capacity to get the farm inputs on loan. To secure the loans, farmers were advised to organize themselves into clubs.
Gondwe also said another challenge was that most of the farmers are yet to pay back the loan.
He said so far Malawi Rural Development Fund (MARDEF) has been tasked with collecting repayments from the concerned farmers.
“It is expected that a total of MK11.1 billion will be collected from the 32,500 metric tons distributed. So far, a total of MK3.1 billion has been collected and these proceeds shall be used to repay part of the outstanding bills with the suppliers and distributors,” said Gondwe.
He added: “The complexity of the legal and financial problems that are outstanding in this matter have led to the suspension of this programme.”
Gondwe, however, promised that the new administration will continue with FISP ‘in all its aspects’ in a bid to continue with its food self-sufficient drive.Follow and Subscribe Nyasa TV :