Taxpayers in 2017 started repaying the $50 million (about K37 billion) the Malawi Government borrowed from India in 2011 to mechanise agriculture but ended up benefitting selected individuals, it has emerged.
In an interview yesterday after his appearance before Parliament’s Public Accounts Committee (PAC) inquiry into the controversial tractors deal, Secretary to the Treasury Cliff Chiunda said government is paying back the loan at an annual interest of two percent. He said the loan will be repaid over 25 years effective 2017.
He said: “The loan had a grace period of five years from 2011 so after that we started repaying with two percent interest. It is a concessional loan.”
Chiunda said the controversial tractors constitute $9 million (K6 billion) and after the disposal of some of the units, government expected to raise K415.9 million but has collected K383.8 million to date. He said the proceeds were deposited into the government consolidated Account Number One.
“Cabinet approved the sale of the tractors and the ministry followed all procedures of public asset disposal as required,” he said.
PAC vice-chairperson Noah Chimpeni has since deemed the loan as a burden on Malawians.
“During the week, we have been meeting various officials in government as regards the disposal of the equipment. It is sad that the disposal wasn’t beneficial to Malawians as just a few individuals benefitted.
“After the inquiry, we will come back with our position as a committee, but to say the truth, the disposal was not well thought of and a flop,” he said.
The loan was meant to mechanise agriculture and included purchase of 177 tractors and 144 maize shellers, 90 tipping trailers and 48 seed-cum-fertiliser drilling machines.
The tractors were meant for distribution to agriculture development divisions (ADDs) to enable smallholder farmers graduate to mechanisation by hiring the equipment.
Out of the total implements procured, 69 tractors, 15 trailers, 70 maize shellers and 17 seed-cum-fertiliser machines were offered for sale in August 2014.
During the inquiry, it emerged that the tractors were sold at an average price of K5.6 million against a potential price of K10 million because authorities used the exchange rate used during the purchase instead of the prevailing one at the time of the sale.
PAC’s inquiry comes against a background of a High Court case where two principal secretaries (for Agriculture, Irrigation and Water Development; and Finance, Economic Planning and Development) were convicted for contempt of court after they purportedly ignored a court order to issue a public apology to Malawians for alleged maladministration and flawed disposal of the equipment.
However, the High Court later set aside the earlier conviction to hear the two principal secretaries’ side of the story.
The case followed an Ombudsman report after a smallholder farmer in Rumphi and former Dedza East legislator Juliana Lunguzi lodged complaints about the sale of farm equipment dubbed Tractorgate.