Malawi suspends JB’s farm input loan facility

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.

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