K50 billion Tractorgate loan matures

Ministry of Finance and Economic Affairs says the $50 million (about K50 billion) loan Malawi Government obtained from Exim Bank of India in 2011 to procure 177 tractors and other farming machinery has matured.

The ministry’s spokesperson Taurai Banda said the development means debt servicing has started and that the country is expected to pay about $58 million (about K58 billion) over 25 years to clear the loan.

He said: “The loan has an average interest rate of 1.5 percent per annum. The loan has a repayment period of 25 years, including a grace period of 4 years.

“The loan is being serviced from the consolidated account of the Malawi Government, just like any other loan.”

The farm equipment deal turned sour after it emerged that politically connected and other individuals benefitted from the equipment meant to promote agriculture mechanisation. Investigations by the Office of the Ombudsman found that most of the people who bought the equipment meant for hiring out to smallholder farmers got the same for a song.

But Banda said government recovered part of the money from the equipment dubbed as Tractorgate, saying the Ministry of Agriculture deposited the funds in government accounts.

He further said subsequent deductions are being made directly through the government payroll of each officer who bought the equipment.

Banda said: “Of course, some tractors and shellers are still available and being accessed by farmers. The idea behind the facility was to assist in mechanisation of agriculture activities.

“So, some tractors and shellers are available at various agriculture development divisions [ADDs] for hire by interested farmers at a fee which is contributing to agriculture productivity.”

In an interview at the weekend, Ombudsman Grace Malera said her office is still following up on the Tractorgate case and that there is some progress in resolving issues that were raised in the Ombudsman’s report on the matter.

She said her office is following up on implementation of the directives in the matter. However, she said responsible authorities have achieve 80 percent compliance.

“When you look at our chart in terms of rate of compliance, the Tractorgate is actually one of the cases where the compliance went up all the way to 80 percent in terms of directives that were given,” said Malera.

In its 2020 report, the Office of the Ombudsman detailed how some of the tractors and other farm machinery bought using the $50 million facility were illegally sold to public officers and other farmers in total disregard of the country’s laws.

The sale was allegedly disguised as a routine public auction of government equipment and K143 million could not be traced after the auction. Out of 177 tractors, only 77 were distributed to ADDs across the country.

In the report, the Ombudsman asked the country’s prosecuting authorities to crack down on State procurement chiefs implicated in the scandal. Some of the Tractorgate beneficiaries were politically-linked individuals.

Malera said her office is encouraged with the progress that is being made to have the issues resolved on the matter.

“You will recall that there was a directive that the relevant ministries should issue an apology that was complied with. There were other administrative actions that government ministries, departments and agencies were supposed to do, that have since been complied with as well,” she said.

The Ombudsman’s report also called for an apology to the people of Malawi, which government belatedly issued following a court action.

Two senior public officials, notably the Secretary to the Treasury and Principal Secretary in the Ministry of Agriculture were later found in contempt of court for failing to adhere to some of the recommendations.