April 3, 2003

Strong opposition to privatisation of ADMARC

Malawians have launched a campaign against moves by the government to privatise the sole state corporation responsible for distribution and marketing of agricultural produce. Through civil society groups, they have expressed fear that the move would threaten an already shaky food security situation in the country, and might endanger availability of maize, their staple food.

Malawi is among southern African countries hard-hit by hunger. Factors blamed for this include erratic weather, low investment in the agricultural sector, and poor food security policies, worsened by unfavourable donor conditionalities. In 2002, 500 people were reported to have died as a result of famine. Seventy percent of the population faced starvation. The country had a 600,000 metric tonnes of cereal deficit, and is now importing up to 250,000 metric tonnes, mostly from South Africa.

Currently, the government of Malawi is undertaking privatisation of its loss-making entities as recommended by the International Monetary Fund (IMF) and other western donors.

Since its launch in 1996, the privatisation process has already had adverse impact, evident in massive job losses, skyrocketing prices of goods and services, and scarcity of some basic commodities. The programme is now confronted with strong opposition. Plans to privatise State-run Agricultural Development and Marketing Corporation (ADMARC), the sole distributor and marketer of all agricultural produce, have raise some eyebrows.

Malawi's Privatisation Commission (PC) has made attempts to convince critics, saying the parastatal, which markets subsidised maize (staple food for the 10 million Malawians), was making huge losses and burdening government's budget through subventions. The commission also cites its poor performance, which it says, could be improved if the parastatal was commercialised towards privatisation.

The country's civil society, through 18 organisations, have formed a task force to block the sale of ADMARC, charging that the government had a social responsibility to feed its people and guard against transferring maize distribution into private hands. World Vision International, Consumers Association of Malawi (CAMA), the Malawi Congress of Trade Unions (MCTU) and Churches Action in Relief Development (CARD), are some of the organisations. They are supported by British-owned Oxfam, a non-governmental organisation.

The task force argues that the moment ADMARC goes into private hands, interests of disadvantaged people, especially in remote rural areas, will be overshadowed by profit-driven managers. It also warns that private traders might not be interested in venturing into rural areas, for fear of lack of good business, which would result in food deficits to the rural poor, who make up over 80 percent of the population. The task force commissioned Dr Khwima Nthara, an economics consultant with the University of Malawi, to determine the impact of privatisation, prior to setting resolutions to counter the move. "It would be folly to rush for wholesale privatisation," notes Dr Nthara, adding that there was need to strike a balance. "We recommend that ADMARC should not be privatised. Instead, it should operate as a commercial entity under the current status of a statutory corporation," he asserts.

Oxfam programme representative, Nellie Nyang'wa, says the speedy privatisation will disadvantage the poor. She reasons that privatisation of ADMARC would pose a food security threat. "Oxfam is therefore protecting the underprivileged from private traders manipulation of the price of maize, should subsidies be removed," she says. "The basis of taking maize as a commercial product is not understandable. The issue of ADMARC is therefore central to the lives of the people of Malawi," Nyang'wa emphasises. She joins the list of other stakeholders who blame the West for imposing privatisation on other countries, while protecting their own generously subsidised farmers and agricultural sector.

A report released by Dr Nthara, titled What Needs to be Done to Improve the Impact of ADMARC on the Poor, proposes checking of political influence on the board of directors of ADMARC, which it claims, was behind the poor performance of the corporation.

As a tentative programme, Malawi government once granted private businesses mandate to embark on maize distribution. But it did not take long before people complained of exorbitant prices, and lack of the commodity in many rural parts. Senior government officials, including cabinet ministers, used their influence to purchase large quantities of the cereal, which they hoarded for several months. This prompted the government to rescind its decision, passing back the responsibility to ADMARC, while deliberating on its privatisation.

The development also affected the National Food Reserve Agency (NFRA), which was implicated together with ADMARC, when managers from both organisations were accused by the official Anti-Corruption Bureau (ACB) of indulging in maize rackets. Henry Gaga, NFRA general manager was relieved of his job, pending more investigations, after former agriculture minister, Leonard Mangulama, was dropped from cabinet for the same scandal. Incumbent finance minister, Friday Jumbe who is former ADMARC general manager, is also being probed by the ACB, following allegations of abuse of office while at the corporation. (African Church Information Service)

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