Is Admarc a money laundering operation?
That the Agricultural Development and Marketing Corporation (Admarc) is one of the most inefficient public institutions in Malawi is a no-brainer.
Admarc has this rare and extraordinary gift of making losses in almost every commercial endeavour it indulges itself in or has been pushed by its political masters at Capital Hill to carry out.
As I write this, the State-owned grain trader is the proud owner of a chain of ‘markets’ where nothing is really traded.
If I had my way, most of the hundreds of Admarc infrastructure littered across the country would be sold while they still have some value because the majority of them are falling apart for lack of maintenance and usage.
The national embarrassment that is Admarc cannot even carryout its role as a heavily subsidised buyer and seller of farm produce.
Instead, all it has become is a personal playground of State presidents and his or her coterie. It is amazing that Admarc remains stuck in the past; its nostalgia of the 1970-1989 days of false glory surprisingly continues to inform its business model and decisions today.
In those days, the grain trader had exclusive market rights with no one competing with it—there were no traders around the country mounting their little scales and buying produce from farmers. Indeed there were no major private produce companies then to challenge it.
Those were the days when the public sector was almost the only major economic player. I mean, in the 1980s, there were about 35 State-run players that constituted about 25 percent of Malawi’s gross domestic product.
And that was minus Press Corporation Limited (PCL), which at the time was seen as a personal enterprise of the dictator president Hastings Kamuzu Banda and which singularly controlled at least 50 percent of the national economy.
But then, the line was always blurred between what Kamuzu Banda supposedly owned and what belonged to the State, so we can safely say that 85 percent of the economy (PCL’s 50 percent plus 35 percent of formal State enterprises) was in the hands of the State and its ruling patriarch.
The rest of what remained of the economy was spread mostly among business tycoons who were members of or made their money out of their association with the then ruling Malawi Congress Party while posing as self-made private sector players.
These business titans would do the regime’s bidding, including not starting businesses that would compete directly with Admarc, for example.
Consequently, Admarc, with its seasonal and territorial price uniformity model would make profits in most of its markets and cross-subsidise those that were struggling to make money.
Things were working until the United Democratic Front (UDF) regime under Bakili Muluzi liberalised the produce market just as it did with the rest of the economy under the package of structural adjustment programmes.
Sensing the danger Admarc would be in, various administrations—from Muluzi to Bingu wa Mutharika to Joyce Banda and Peter Mutharika—all tried, half-heartedly of course, to go for Admarc’s radical restructuring and reform, but they have all failed miserably or, most likely, did not want to succeed in the first place.
In the end, the country is still saddled with a behemoth of a shell company that gets billions of taxpayers’ money from Treasury, burns it away in corruption, fraud and political appeasement without regret and shamelessly goes back for more.
In fact, it could be argued that Admarc has become a vehicle for laundering money moved from Treasury in the name of subsidising maize buying maize to politically connected business people who end up being the ones supplying and/or transporting the grain from the parastatal through dubious contracts at inflated prices.
Is it any wonder that the parastatal churns out inexplicably high operating costs—including ridiculous transportation and vehicle maintenance expenses—that its shareholder, government through Treasury, pays a blind eye to?
Furthermore, various administrations have politicised its operations and pricing structure that are now costing billions, including the more than K10 billion that Admarc is set to lose simply because, first, government stopped it from exporting maize at a healthy margin when it had the chance and, second, after Capitol Hill instructed it to cut maize prices by 44 percent for reasons every official we have talked to is bungling through.
Indeed, the cronyism, politicisation and outright carelessness with the people’s money has built an institution that just does not care about covering its costs.
As Admarc stands now, it is not making any useful contribution to the growth and development of any self-sustaining agricultural market in Malawi. If anything, the parastatal is working hard to confuse the market while siphoning money from the taxpayer that ends up clean in the pockets of those linked to power.
So, when all the chaff is gone, the fact is that the political, administrative and humanitarian imperatives that are being abused to maintain a fake sense of relevance for Admarc must be unmasked for what they are: a large and systematic money laundering operation that must be dismantled.
