NMC requests bailout

By Ntombi Mhlongo

The National Maize Corporation (NMC) is struggling to carry out its obligatory responsibilities due to a lack of funds.

In the Public Accounts Committee (PAC) Compliance Report which contains recommendations made following the findings by the Auditor General, Timothy Matsebula, the parastatal’s challenges are far from over.

In the report containing the recommendations, which was tabled and is yet to be debated and adopted by Parliament, it is reflected that the Controlling Officer of the Ministry of Agriculture, that being the principal secretary, submitted to the PAC that among other challenges, the government gave NMC the responsibility of the tractor hire and supplying farming inputs without the requisite funds.

Also, the PS submitted that the maize price was reduced, which resulted in a loss of revenue forcing NMC to seek a bank overdraft. The Controlling Officer, according to the report, disclosed that talks are ongoing with the government for a bailout (either a government-guaranteed loan or a grant) and a turnaround strategy has been developed.

“This includes the introduction of a cut-off system on the subsidy programme to ensure that operations are within the allocated budget, streamlining departments and restructuring the wage bill as well as unbundling of products,” reads part of the report.

As a recommendation, the Controlling Officer was urged to update the PAC and AG on the progress of the turnaround strategy every six months to determine if there are any positive changes.

On another note, the PAC also made a recommendation following a statement made by the Controlling Officer to the effect that the CEO of the parastatal resigned while investigations were going on.

The PAC recommended that the Controlling Officer should table a report on the outcome of the investigation within a month after the adoption of the report by Parliament failing which he will be charged with contempt.
When the AG audited the NMC, he uncovered that there was an E92 million cumulative loss and negative equity balance.

The AG reported in his findings that in the financial statements, the corporation incurred a net loss of E21.19 million for the year ended 31st March 2021. In the previous financial year (2020) the public enterprise made a loss of E23.74 million.

The conclusion made by the AG was that the corporation has an accumulated loss of E26.29 million that has resulted in a negative equity balance of E14 787 452, which means that the entire investment made by the government as a shareholder has been drained such that now the shareholder is indebted to rescue the public enterprise.

He also found that there were insolvency challenges (debts exceeded assets by E92 million), a high wage bill (86% of the income used to pay salaries) and there was a high bank overdraft (E32 420 011).

Still, on the NMC, the PAC has issued a recommendation the parastatal should submit an audit report of how the funds for the farmers’ inputs subsidy programme were utilised.

The recommendation comes after the AG reported that there were no financial statements (reports) on public funds amounting to E40 million transferred to the Ministry of Agriculture in respect of the programme the in the financial year ended 31st March 2021.

In his findings, the AG noted that from the financial years 2018/2019 to 2020/2021, the total funds transferred to NMC, amounting to E90 220 970 were neither accounted-for nor disclosed by the corporation in the financial statements.

The Controlling Officer is said to have told the PAC that the input subsidy and tractor hire programme has been audited and the auditors had promised to submit a report by the end of October 2022.

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