Governance expert queries Admarc closure

Finance and corporate governance professor Kamwachale Khomba has described as an anomaly government’s decision to close Agricultural Development and Marketing Corporation (Admarc) and move to fire 3 122 employees.

In a telephone interview yesterday, he said the government, in its capacity as a shareholder of the State produce trader, was supposed to devolve its powers in making such a move.

Khomba said: “In terms of corporate governance, the government is a shareholder and it was supposed to devolve powers to the board and then the board to the executive management.

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“There is no way the government can make decisions. It was supposed to be the board and the executive management of Admarc giving extensive reasons to the staff. That is an anomaly.”

He said the government is supposed to provide direction to the parastatals and not management of the overall entity. He said the Admarc scenario is typical of how statutory corporations operate in Malawi.

Minister of Agriculture Lobin Lowe last Wednesday announced the closure of the institution and sent all staff on paid leave to pave the way for redefining the institution’s functions.

But barely days after the announcement, Admarc board chairperson Alexander Kusamba Dzonzi told the Parliamentary Committee on Trade, Industry and Tourism on Monday that 3 122 jobs are at risk as part of the restructuring process.

He also said Admarc needed about K400 billion to implement a turnaround strategy that will see it set up factories for value addition, among others.

When asked where Admarc will source the funds, Dzonzi yesterday asked for a questionnaire which he promised to respond to by close of business.

In a separate interview yesterday, agriculture policy expert Tamani Nkhono-Mvula said in restructuring Admarc, there was no need to close the institution.

He said challenges facing Admarc have existed for some time and have nothing to do with Admarc itself, but the institutional framework within which it operates, including the law founding it.

Nkhono-Mvula said: “For Admarc to be resuscitated there are several institutional issues that need to be addressed. If politicians play around with Admarc, they do so because the Admarc Act gives them those loopholes.

“The former glory of Admarc was facilitated by the institutional environment. However, I am not seeing Admarc getting back on its feet soon and it’s a far-fetched dream that Admarc will ever go back to its former glory.”

He said closing Admarc is a crisis, especially considering that it is a main actor in execution of the Affordable Inputs Programme (AIP), as such, there is need for key personnel who will ensure proper planning and that all logistics are in place.

Admarc Workers Union secretary Memory Kanyenda yesterday said in a telephone interview that they are still discussing the matter; hence, they will come up with a position in due course.

Lowe last week said the Tonse Alliance administration has for over two years been analysing best ways of restructuring Admarc and that the Ministry of Agriculture and the institution’s shareholders concluded that the parastatal is failing to tick and bring desired results.

The minister attributed such failure to alleged corruption among some employees, low productivity due to laziness, unprocedural recruitment leading to excessive workforce and prolonged conflicts between board of directors and management.

Admarc has been struggling financially and has over the years failed to serve Malawians as per its mandate of produce stabiliser, ready market for farmers and a social function of the government’s food security apparatus.

The 2021 Malawi Government Annual Economic Report shows that as at half year of the 2021/22 fiscal period, Admarc recorded a net loss-after-tax of K3.7 billion.

According to the report, Admarc has been surviving through drafts and loans which has been a setback to its growth.

Until 1987, Admarc was the sole buyer of smallholder produce, but in 2004, it was incorporated as a limited liability company with government owning 99 percent of the shares.