Heavy spending on FISP worrying, says Kabaghe
By Gift Chanda and Chiwoyu Sinyangwe
Wed 16 Oct. 2013, 14:00 CAT
CONTINUED heavy spending by the government on FISP and the FRA at the expense of other agricultural programmes is worrying, says Chance Kabaghe. And Kabaghe, who is the executive director of the Indaba Agricultural Policy Research Institute (IAPRI), says the government should be careful not to stifle competition in the fertiliser business as it seeks to revamp the Nitrogen Chemicals of Zambia (NCZ) by awarding it big tenders to supply inputs under Farmer Input Support Programme (FISP).
But agriculture minister Robert Sichinga says the government's decision to buy agriculture inputs for this season's FISP, cutting out the private sector will save the country millions of dollars.
Commenting on strategic policy measures the government plans to undertake next year in the agricultural sector, Kabaghe, the former agriculture minister, said the government should be commended for focusing on some key drivers of the sector such as roads, irrigation and dip tanks but that the continued heavy spending on FISP and the Food Reserve Agency (FRA) was a concern.
"We have serious question marks with huge allocations going to only those two programmes. These programmes, according to our research, have shown that they have not produced the required results," he said.
"Productivity per hectare has remained constantly low - at two tonnes per hectare. The potential of the maize seed varieties produced by seed companies in this country is above eight tonnes per hectare."
Last Friday, finance minister Alexander Chikwanda proposed in the 2014 national budget to spend K500 million on FISP, while the strategic FRA would gobble about K1 billion.
"We would have loved a lot of money going into research and development because this is an area that is crucial for growth of the agriculture sector," Kabaghe said.
He further cautioned the government not to allow NCZ to cloud out the private sector in the fertiliser business.
The government, according to Chikwanda, plans to continue revamping the NCZ in 2014, extending its operations to produce urea.
"I know everyone now is very happy that NCZ is being recapitalised and they have already supplied 70,000 tonnes of D compound fertiliser to the government and the minister said that next year, they will also be producing urea. In the short run, it is a good thing to do but I can assure you that we should not continue to do that," he said. "All that is going to do is stifle competition."
Kabaghe said the past years had seen vibrant companies competing in the fertiliser business but these could collapse if all the contracts would be awarded to NCZ.
But Sichinga has defended government's move to eliminate private companies that imported fertilizers for resale to government.
The government this year plans to spend over US $1 billion in buying and distributing seeds and fertilizers to peasant farmers.
Sichinga said the government is subsidizing the inputs by 51 per cent while beneficiary farmers would pay 49 per cent of the K1, 070 which involved two bangs of basal dressing, another two for top dressing and a 10 kilogramme bag of seed.
"If you look at the cost, the tender that came in, they private suppliers were asking for a US $1, 000 per metric tonnes," he said. "But we are paying US $383 per metric tonne with Zambia paying for costs of the fertilizer from Saudi Arabia."
Meanwhile, Sichinga said the FISP was flawed in that it captured only 900, 000 poor farmers, leaving out 600, 000 eligible farmers.
He said effective next year, the flopped electronic voucher system would be replaced with electronic cards that carried biometrics for beneficiary farmers.
Sichinga revealed that the use of electronic voucher system which had been touted since 2011 failed to take off due to lack of computers and an operation centre.
"We have just completed creating the data base for the e-card for farmers," he said. "With this e-card which farmers will get, it will carry the value which government can send to beneficiary farmers. This e-card will have the number of the farmer, his or National Registration Card number and also a password."
Sichinga also said the FISP was supposed to cater for 1.5 million farmers and not the 900, 000 serviced currently.
"We have just finished our FISP census and according to our census, we just have under 1.5 million eligible farmers for FISP," he said.
"So, there is a 600, 000 farmers that we are not supporting because the amount of money we have is limited. So, that 241, 000 that was supposed to be on e-voucher, now, we have to put them on the revised FISP. From next year, it's just gonna be Farmer Input Support Programme which is electronically done."
And Sichinga said 50, 000 metric tonnes of the top dressing fertilizer was expected in the country this month via Nakonde from Dar es Salaam and distribution would start from the Northern parts of the country.
"My plan is that before the end of October all the fertilizer and seeds should be with the farmers but suffice to say it will be in time because it basal dressing fertilizer is all in the districts right now," said Sichinga in an interview.
"We expect to procure, in total, just under 100, 000 metric tonnes of top dressing while the entire D-Compound of slightly over 72, 000 will be produced from Nitrogen Chemicals of Zambia. We are almost finished with production of basal; as of last week, we produced 68, 000 metric tonnes and of that number, more than 50, 000 metric tonnes has already been dispatched to the districts."
Labels: CHANCE KABAGHE, DEBT, FISP, ROBERT SICHINGA
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Non-utilisation of loan facilities by companies worries Fundanga
By Fridah Zinyama
Thu 22 Apr. 2010, 02:00 CAT
BANK of Zambia (BoZ) governor Dr Caleb Fundanga has revealed that no Zambian company has so far accessed the US$80 million that was released under the Export Fund of Zambia in 2008.
And Zambia Association of Manufacturers (ZAM) president Chance Kabaghe complained that there was no long-term financing readily available on the Zambian market and bank interest rates were very high.
The US$80 million facility which was signed in 2008 through the PTA and Afreximbank was meant to help export-oriented companies become competitive through value addition to their products.
Responding to a question by Kabaghe on whether BoZ would help to recapitalise the Development Bank of Zambia (DBZ) to help the business community meet its long-term financing needs during the ZAM’s annual general meeting last week, Dr Fundanga observed that very few Zambian companies were accessing long-term loans from international financial institutions, a situation which made expansion very difficult.
“I am one of the directors on Afreximbank and I find it embarrassing that no Zambian company has tried to access these funds,” he said adding, “someone has availed these funds but no one was making an effort to access some of the money.”
Dr Fundanga said no one would force-feed any Zambian company to access these funds and companies, which were serious were applying for the money to grow their businesses.
“Funds are available... go out and borrow because there are a lot of facilities available which companies can access,” he said.
Dr Fundanga said the government through BoZ had no intention of recapitalising DBZ, though it appreciated the bank’s work.
“For one, manufacturers can use the stock market to raise long-term financing for projects which cannot be financed by local commercial banks,” he said. “There are other sources of financing which can be accessed by the business community like the PTA Bank and Afrexim Bank.”
Dr Fundanga explained that being one of the directors on Afrexim Bank, which has a membership from most African countries including Zambia, it was saddening to note that very few Zambian companies ever applied for financing from the bank.
“There are very few Zambian companies that explore other sources of financing. Other companies in countries like Zimbabwe, South Africa, Kenya, Tanzania, Senegal and Egypt are getting financing from these banks at very affordable rates,” Dr Fundanga said.
“All you have to do is put your businesses in order and talk to experts who can advise you on meeting the requirements set by these banks.”
Dr Fundanga said high interest rates posed a great challenge for the growth of the private sector in the country.
“In 2009, when the country was suffering from the effects of the global financial crisis, banks preferred to lend to government because of the lower risk involved when dealing with government,” he said.
“Previously, commercial banks had been lending to the private sector that started defaulting with the onset of the financial crisis.”
However, Dr Fundanga said commercial banks might be forced to start dealing with the private sector because the government securities were yielding low rates.
“There has been a reduction in yield rates in government securities from as high as 14 per cent to two per cent,” he said, adding that “the returns were getting so low that banks will be forced to lend to the private sector.”
Dr Fundanga said the market fundamentals were pointing to the fact that interest rates should be reducing.
“The coming of more banks on the market will bring competition in that banks will be outdoing each other to come up with products to offer to their customers,” he said.
“At the moment there are 17 banks, with another one to open soon called International Commercial Bank of Malaysia.”
Dr Fundanga said things could get better for the private sector with the coming on board of Islamic banking.
“We are still looking at policy for the same,” Dr Fundanga said. “And I believe that Islamic banking will create a lot of challenges for the current banking market since it does not charge interest rates on the finances it avails to business houses.”
Earlier, Kabaghe complained that Zambia currently had high interest rates, which made it difficult for the private sector to access funds for expansion projects.
“The 30 per cent interest rates are very worrying as they are affecting the growth of the manufacturing sector,” he said. “When we deposit, we are only given three per cent interest for the use of our money....something is wrong with these interest rates.”
Kabaghe said at the moment commercial banks in the country were only availing short-term financing, which was not appropriate for growing companies.
“This is why, we would like to find out whether the Bank of Zambia has any plans to recapitalise DBZ, which is a longterm provider of finances,” said Kabaghe.
Labels: BANKING, CALEB FUNDANGA, CHANCE KABAGHE, LENDING RATES, NEOLIBERALISM
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Kabaghe calls for ‘conducive policies’ to boost agriculture
By Florence Bupe
Tue 23 Feb. 2010, 03:51 CAT
THE Food Security Research Project has called for conducive policies that will foster development of agriculture through capital inflows.
Appearing before the parliamentary committee on agriculture and lands yesterday, project director Chance Kabaghe said there are a number of factors that have been blocking capital investments in land and agriculture.
He reiterated the importance of a comprehensive countrywide land audit to determine how much land is available both under state and customary tenure for development purposes, but stressed that an audit alone would not resolve the current challenges being faced in issues of land allocation and development.
“There is urgent need for a comprehensive land audit, but that is not a panacea to the problems currently being faced in the allocation and development of land,” Kabaghe said. “There are other factors that hinder agriculture and land investments such as unfavourable policies.”
Kabaghe cited the embargo on product exports as a factor that has prevented growth in the agriculture sector and recommended that the government should consider lifting the ban on exports of wheat, among other products.
“As the situation stands right now, we are blocked. In terms of seed, government has allowed for exports and Zambia is a regional supplier. But the ban on exports of other crops has remained and this is not promoting investments,” said Kabaghe.
Labels: AGRICULTURE, CHANCE KABAGHE, LAND RIGHTS
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Seedco earns US$10m from exports
By Katwishi Bwalya
Tuesday August 12, 2008 [04:00]
SEEDCO chairman Chance Kabaghe has said the company has realised US$10 million from the export of seeds to the southern and eastern African regions this year. Kabaghe said the export of seeds would not lead to any shortage in the country in view of the next farming season.
“We have enough stocks to cater for our farmers across the country so there is no need for our farmers to panic as a result of the exports because we have enough stocks,” he said in an interview.
Kabaghe also disclosed that SEEDCO had already started distributing seeds to farmers countrywide to avoid late delivery.
“We have started early this year because we want to avoid the late delivery of seeds to our farmers and what we have done is to open depots in our districts so that even farmers in the rural areas can have easy access to the seeds,” he said.
Kabaghe said the move was aimed at helping farmers to overcome some of their perennial challenges, consequently improving food security in the country.
“The seeds have already reached the districts so farmers can start getting them because we have opened enough depots to meet the demand of our farmers,” said Kabaghe.
Labels: CHANCE KABAGHE, SEEDCO
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