‘Use FSP funds to revamp NCZ’

‘Use FSP funds to revamp NCZ’
Written by Kabanda Chulu and Joan Chirwa
Wednesday, February 11, 2009 10:17:43 AM

THE government should use part of the K435 billion allocated to Fertiliser Support Programme (FSP) to revamp operations at Nitrogen Chemicals of Zambia (NCZ), sector players have advised.

But agriculture minister Brian Chituwo has said piecemeal financial bailouts would not solve the current problems being faced by NCZ.
Meanwhile, a Chisamba farmer Dutch Gibson has suggested a complete elimination of the FSP, charging that the programme is a source of corruption in the Ministry of Agriculture.

In the 2008 budget, the government announced a K58 billion proposal for the recapitalization of NCZ but in June the same year, this was revised downwards to K8 billion.

The then agriculture minister Sara Sayifwanda indicated that the government decided to revise the funding to avoid another misappropriation of funds like was experienced before when K24 billion, which was given to the company in 2003, was used by management mainly for administrative purposes instead of improving machinery at the plant.

Sayifwanda that time further observed that government had been spoon-feeding NCZ for a long time and that it was now up to the company to seek other sources of revenue for it to become self-reliant.

However, during the Agricultural Consultative Forum (ACF) post-budget discussion for stakeholders in Zambia’s agriculture industry held in Lusaka last week, Women in Agriculture board member Helen Samatebele said resources allocated for the importation of FSP fertiliser should also be channeled to recapitalise operations at NCZ.

“This budget needs balancing to realign it to cater for key sectors and it is not too late, for instance why should we continue importing fertiliser and incurring huge cost when NCZ just requires K58 billion for recapitalisation?” asked Samatebele.

“And why can’t this government channel part of the K435 billion meant for FSP to revamp operations at NCZ which is still viable? And this is the same government that talks about job creation and yet they seem not to be doing anything about the company which is also the lifeblood of Kafue district.”

But Dr Chituwo, without being specific, said several factors needed to be addressed before NCZ could be recapitalised.

“There are many things that we have to sort out to prevent NCZ becoming a drain of resources hence piecemeal financial bailouts will not help and government is committed to ensure that NCZ becomes a viable company for the agricultural sector,” said Dr Chituwo.

Nevertheless, some industry experts believe that the NCZ was still a viable entity that could play a key role in Zambia’s pursuit of diversifying the economy away from copper mining to agriculture.

“Most of the raw materials for the products of NCZ are found locally. Ammonia is produced from coal which is mined at Maamba Collieries through coal gasification process. The raw materials for Nitric Acid production are compressed air and ammonia while the raw materials for Ammonium Nitrate are Ammonia and Nitric Acid,” they stated. “Sulphuric Acid is produced from pyrites while Ammonium Sulphate is produced from Ammonia and Sulphuric Acid and the compound fertiliser NPK is produced from Nitrogen, Phosphorus and Potassium granules.”

And according to the privatisation wing of the Zambia Development Agency (ZDA), when fully operational, NCZ could command a large share of the market for its products [all types of fertilisers] that are utilised in the domestic agricultural market and ammonium nitrate and sulphuric acid could be sold to the mines.

But due to lack of working capital coupled with stiff competition from imported fertilisers, NCZ has been failing to meet the requirements of the country and the company has since targeted its marketing efforts on a few local entities and government agencies.

NCZ has also sought to reach small-scale producers by introducing smaller packages of fertiliser which are sold through retail outlets.

The company was incorporated in 1967 and has three complexes that produce ammonium nitrate and nitric acid. It also has fertiliser blending and the sulphuric acid plants.

And Gibson said government could get financing from donors for small-scale farmers’ inputs while concentrating its energies on improving infrastructure for a vibrant agriculture sector.

“There are a lot of costs associated with the FSP, meanwhile it is encouraging corruption in the sector. I think it should just be scrapped off,” Gibson suggested. “We can cut out FSP completely and let [finance minister Dr Situmbeko] Musokotwane, [former finance minister Ng’andu] Magande and [agriculture minister Dr Brian] Chituwo go to the donors and sell the idea of FSP. They [the donors] would probably be willing to subsidise agricultural inputs in Zambia and then this will see us producing more and exporting surplus produce to neighbouring countries like Angola and the Democratic Republic of Congo.”

And during the ACF discussion, former deputy director at Livestock Development Trust (LDT) David Daka said the government was deceiving itself by allowing FSP and Food Reserve Agency (FRA) to be under the Ministry of Agriculture and Cooperatives (MACO) when the two institutions were just involved in ‘fighting crises’.

“FRA and FSP should be transferred to disaster management and mitigation unit because the two institutions are just involved in fighting crises instead of preventing the occurrences,” Daka said.

“And funding for animal disease control does not mean that animal production will increase because those animals are not well fed and no matter the good medicine given, those animals will still die hence the focus should be on animal husbandry to increase production.”

Daka also said NCZ should be transferred back to the Ministry of Commerce so that a strategic partner could be found to revamp operations.

And Maureen Mwanawasa Community Initiative (MMCI) coordinator Miriam Nkunika said small-scale farmers were willing to buy fertiliser if the commodity could be made available at the time they sell their produce.

“We need to have fertiliser throughout the year not just in November and December and many farmers are willing to buy the commodity immediately they sell the produce some time in June or July and we appeal to government to ensure that fertiliser is available all year round,” said Nkunika.

And former FRA executive director Chance Kabaghe said there was need to clearly spell out the outlying and uneconomic areas where the FRA should concentrate while allowing the private sector to participate as well.

“Firstly, markets should be predictable and reliable and when we say outlying areas for FRA, what does it mean because we need to be clear since outlying areas can be Chongwe or Mungule and government must facilitate the participation of the private sector in agriculture marketing process,” said Kabaghe.

And Zambia National Farmers Union (ZNFU) president Jervis Zimba expressed concern that the increased allocation to agriculture would not produce positive results if a tangible plan was not developed for the sector.

“It is important that government embarks on ensuring that come next year, we can have proof of increased productivity of say three to four tonnes of maize per hectare as a direct result of funding. But it will be very disappointing to be told that funds were wasted on workshops at the expense of providing extension services,” Zimba said.

“Enhancing productivity has been a primary concern among small-scale farmers and we again urge government to adopt a coordinated plan of action that should monitor progress being made.”

Recent data from the Ministry of Agriculture and Co-operatives indicates that yields per hectare have slumped over the years to around 1.33 metric tonnes of maize due to, among other reasons, poor agricultural practices among small-scale farmers resulting from the almost non-existent extension service. However, research has shown that using the available seed in the country, average maize production was expected in the region of five tonnes per hectare, with correct planting, fertilisation and weeding by the small-scale farmers who contribute over half of the country’s total maize production.