FINANCE minister Tendai Biti has ordered a probe into the affairs of the Zimbabwe Farmers Development Company (ZFDC) after government was forced to settle its Chinese loan.
REPORT BY KUDZAI CHIMHANGWA
But ZFDC has insisted that its books of accounts are in order. The company is jointly owned by Farmer’s World and government, with shareholdings of 55% and 45% respectively.
Biti said that in the first quarter of the year, treasury paid US$76,5 million for external loan repayments. The bulk of these repayments went to China in respect of pre-inclusive government debts.
Biti said of that figure, US$27,1 million went to clear Farmer’s World debt and Industrial Development Corporation arrears.
Around 2006, ZFDC borrowed the sum of US$55 million for the purchase of tractors and other farm equipment.
Biti said the government guaranteed the loan and following the default, the Chinese had to call on the guarantee, and government had to pay this amount.
“On our part as the Ministry of Finance, we have caused an audit into the books of Farmer’s World to see where the money was going. We know that they were getting tractors and other farm equipment. we know that they were selling and disposing of them in hard currency, therefore there should be no reason for default,” he said.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Biti said he had spoken to President Robert Mugabe about the matter.
However, ZFDC finance and administration director Thomas Nherera said the money was never borrowed by Farmer’s World. He said rather, two loans were secured then by the central bank, on behalf of government for on -lending to ZFDC.
“Our books are ready for audit, we have nothing to hide, we still have close to US$15 million worth of equipment. As far as we are concerned, it’s a normal audit because government has a fiduciary role to audit businesses in which it has interests,” said Nherera.
He said government had been called on to make repayment in its capacity as a borrower and guarantor while all conditions pertaining to on lending had been agreed to by China, as a core principal.
Nherera said challenges that farmers were facing due to low production were having an effect on repayments.
The Chinese loans had a 10-year tenure at interest rates lower than 10%, while on- lending to farmers was at a rate of 5%.
Farmers in need of the equipment were expected to pay a 20% deposit and the balance was to be paid over five years.
Farmers without cash for deposit had the option of paying using their current crops or livestock with a value equivalent to 20% of deposit.
Equipment bought included tractors, eight bulldozers, hard disc harrows, planters, ploughs, lorries, combine harvesters, front-end loaders, reapers, 30 and 10-tonne trucks, among other equipment.
Nherera said arrears by farmers amounted to US$35 million.
“It’s really a question of the agriculture sector’s performance rather than of loan mismanagement,” he said.
