Admarc decries collateral terms
Agricultural Development and Marketing Corporation (Admarc) has lamented that the loans it is forced to get from local banks have harsh conditions.
The State grain trader said it is being forced to pay salaries for agents of the banks assigned as collateral managers.
Admarc general manager Rhino Chiphiko said this on Tuesday in Lilongwe when Admarc officials met the cluster of the Parliamentary Committee on Agriculture and Food Security and Committee on Natural and Climate Change.
He said despite government being the guarantor of the loans, banks still demand collateral and they hold on to maize that Admarc buys as collateral.
Chiphiko said the bank then deploys collateral managers to ensure the collateral is not tampered with. However, it is Admarc that pays salaries for the collateral managers and other costs.
The Admarc general manager revealed that last year, Admarc paid about K621 million in collateral costs to collateral companies.
Chiphiko said: “These are the costs that Admarc pays in addition to the loans. They put their staff there, the collateral managers who are not actually chosen by Admarc. These are collateral managers that are recruited by the banks but Admarc pays for salaries and every other cost in addition to our own staff.
“So for last year, that is up to December 31, we paid a whopping K621 million to these collateral companies in addition to the loans and interests.”
In an interview after the meeting, Chiphiko lamented that the arrangement of paying collateral managers is stressing the company.
He said there are about 700 people who have to be paid under the collateral arrangement but at the same time, Admarc needs to look into salaries of about 3 000 employees.
Asked why the institution signed for such conditions in the first place, Chiphiko said Admarc cannot run away from such fees, saying every bank in the country is giving it such conditions on the loans despite that government is the guarantor.
When contacted, Minister of Finance Sosten Gwengwe said the matter concerns the budget and such issues are being discussed by members of Parliament.
He declined to comment, saying the matter is before the cluster of Parliament committees.
Admarc has been running on loans from commercial banks and the loans are heavily affecting the institution which is now seeking a bailout from government.
Currently, Admarc owes banks about K64 billion.
