Admarc handling was amateur hour

The suspension of Agricultural Development and Marketing Corporation (Admarc) operations back in September was done amateurishly with little regard to the company’s stakeholders, including the board, employees, creditors, suppliers and farmers.

Heck, it is not even clear whether that suspension was legal as per the Companies Act.

While the justification for that abrupt decision remains a mystery (the findings of the audit report that revealed extensive financial abuse at the company does not count as a strong enough reason for the radical move), the fallout is not.

Because as we speak, the company’s employees have not been paid their September and October salaries and there is little hope that they will smile at the end of this November, according to Comptroller of Statutory Corporations Peter Simbani.

Meanwhile, I doubt that the parastatal’s loans are being serviced; thereby worsening its debt burden to levels the company will be lucky to recover from if it survives the indefinite operational suspension.

So far it remains unclear who will step into Admarc’s role in fertiliser and maize distribution amid a tightening market for both products and limited time since the growing season is already here.

Moreover, the suspension came exactly one year before the expiry of the reforms contract in September 2023 with President Lazarus Chakwera that Agriculture Minister Lobin Lowe signed on Admarc’s behalf back in 2020. Virtually nothing in that contract has seen the light of day.

And if only Lowe and his minions at the Ministry of Agriculture had done their homework, they would have realized that they did not need to pull the plug on Admarc just so they could come up with a sustainable business model for its survival.

If that were the case, several companies would be on their knees worldwide every few years or so.

It is equally baffling that the Admarc move appears to have been made without the active involvement of the shareholder—Treasury—the Department of Statutory Corporations, which has oversight mandate over parastatals and the Ministry of Labour.

How Lowe and his cabal of officials decided to shut down the company on their own, and why they were allowed to proceed with this crazy move has been baffling me ever since.

Had he taken time, Lowe would have known that over the past two decades Admarc has undergone so many strategic reviews of its functions, governance arrangements and oversight mechanisms that he only needed to dust off one of them and implement without the lone wolf muscle flexing and pissing contest he embarked on.

There is also a lot of work that has been done on establishing clearly defined responsibilities for Admarc, guidelines for market intervention within price bands, clearer accountability, and transparency and oversight mechanisms gathering dust.

Indeed, while keeping Admarc a going concern, Lowe could easily have picked up any of the Admarc strategic review reports and execute it.

I particularly remember one Admarc strategic review around 2016 or thereabouts, which was even validated by stakeholders and approved by Cabinet to split the State grain trader into social and commercial arms under a joint holding company.

That decision and the rest made from the strategic review were never executed, leaving Admarc in its glorious moribund state: a perpetually loss-making behemoth with no trading activities to bring any returns.

The company, however, was happily borrowing heavily to support its corruption-prone social obligations of maize purchases that were so opaque in their operations—in terms of financing, procurement and sales—that no one really knew where all the money, and the maize, had gone.

To make matters worse, this opaque Admarc would go for years without publishing audited financial statements and periodic reports outlining maize market buying and distribution plans so that stakeholders, including the general public and watchdogs, could scrutinize the books. That lack of transparency was a fertile ground for the tax-payer funded gravy train that fed politically-connected individuals and some Admarc workers to exploit for their personal gain. No one wanted that to end.

Thus, the company became so used to these easy monies from external finances, especially national budget outlays and Treasury-guaranteed loans that it never thought of finding ways to generate its own resources from the business.

This parastatal never once worried about its indebtedness even as both current and quick ratios hit rock bottom of required benchmarks. The politicians would ensure that they dip their fingers in taxpayer billions to pay-off the debts.

All of this is known in government circles because there are piles of documents to this effect. They just need to be dusted up and implemented—not waking up to cripple the operations of the very company you want to save.