Stop misleading Zambians on ZamPalm viability, it’s a vote-seeking bottomless pit

Last week, President Edgar Lungu went to officiate at the launch of the ZamPalm Out-grower Scheme in Muchinga Province. During the event, Industrial Development Corporation (IDC) Group Chief Executive Officer Mr Mateyo Kaluba, told the President that so far, the government investment portfolio has invested K2.7 million to enable the out-grower scheme takeoff, with 137 smallholder farmers having cultivated 80 hectares. Mr Kaluba added that IDC was investing an additional US$5 million in ZamPalm to expand the capacity of the mill to handle output coming from the out grower scheme.

To our readers who are not familiar with this massive government investment, ZamPalm is the controversial plantation of palm trees which was previously owned by Zambeef, and was purchased by the IDC at US$16 million cash. According to government, in the next couple of years, Zambia will stop importing cooking oil and other related edible oils because all the oil the country needs will be produced and manufactured by this plantation called ZamPalm. In fact, the company manifesto states that Zambia will be one of the biggest exporters of edible crude oil in the region, translating into hundreds of millions of dollar in government profit.

Minister of Agriculture Mr Michael Katambo who accompanied President Lungu, said the project was a true reflection of government’s commitment to the economic diversification agenda, because the project would not only create jobs but also eradicate poverty and make a significant contribution to the GDP.

All those statements, economic analyses and projections sound like such a real deal to a naked eye. When pronouncements and figures are being declared, the ZamPalm project sounds like a long awaited gateway to prosperity for Zambia. But when we look at this investment with our ‘transparent’ lenses, we find that there is a lot of misinformation that is being fed, not only to the President, but the rest of the people of Zambia.

Anyone who has followed the ZamPalm story can agree with us that the figures that are being quoted are scary. Purchasing ZamPalm cost Zambia’s taxpayers US$16 million, an extra US$4 million was spent on working capital, bringing the figure to US$20 million dollars. The out-grower scheme that was being lunched last Thursday will cost government another US$28 million, to benefit about 5,000 local farmers. Already, if we are spending US$4 million on working capital on a project that is far from producing any revenue, then that means it’s an overly expensive undertaking, by any standard.

We have made this observation in the past, and we will keep on reminding the people of Zambia who care about how their money is being spent. The IDC is not following proper investment guidelines and economic reasoning on this matter. When you are investing an annual US$4 million in a company that will take over five years to bring to profitability, you must be certain beyond any reasonable doubt that there is no room for error, because the money spent accumulatively becomes too colossal.

Those who understand our kwacha better, we are talking about over K240 million hard earned money already spent from the pockets of taxpayers. Every year, another K50 million will be spent on this undertaking. What is sad is that no one working at IDC, or Ministry of Agriculture can hold the Bible and swear by the Almighty God to promise the owners of this money that by this specific date, they will start frying their kapenta using cheap, sweet smelling cooking oil from ZamPalm plantation in Muchinga Province as they are being made to believe.

The reason why no one can vouch for the undoubted success of ZamPalm is simple. The climate conditions we have in this country, particularly where this plantation is located, do not support the growth of palm trees. This is not information that we just googled and started speculating. Experts in forestry development working at ZAFFICO, experts from the economic sector and experts from outside Zambia who have vast knowledge and experience in this sector, were all involved in the research on this project, and they all came up with one conclusion; the climate is not favorable and it is bad business. That is why Zambeef looked for some foolish people to buy it from them because they projected a loss. If it was a viable business, they were not going to sell it to anyone, they would have guarded it jealously, like they are guarding the meat company.

We the Zambian people have taken over this liability, pouring in millions of dollars which we are almost certain that will eventually go to waste. Meanwhile, we have a list of already existing parastatals which already have clear profit-generating prospects on the market, such as the Nitrogen Chemicals of Zambia. All they need is recapitalization worth half of what was spent to purchase the risk child called ZamPalm. Given US$16 million, NCZ would be producing all the fertilizer that farmers in Muchinga actually want for crops that are right for their climate.

Let the people of Zambia demand answers from IDC on what that working capital they are talking about. We are not calling anyone at IDC a thief, but can they tell us how the K50 million being spent at ZamPalm annually is used? What is the breakdown of this money? If only K2.7 million was spent on the out-grower scheme, who are they spending the US$4 million on every year? They are saying they need another US$5 million to expand the mill. How do you expand the mill when you have not reached full capacity?

In our view, people have colluded to mislead the President on this project in order for them to chew. And the President has bought into it because he needs votes from farmers in this area. So he needs to use this investment to make northerners believe that the Patriotic Front under Mr Edgar Lungu is creating jobs.

The sad reality is that we are not making economic decisions as a country, but political decisions. Unfortunately, the consequence is this taxpayers’ money we are wasting today will only be realised long after President Lungu and those who are misleading him have left power. We know that there is need for the government to implement projects, but let the economic advisors to the President be truthful for once. We know that they have seen these figures and they know that they are not making good business sense.

With this kind of careless ploughing of dollars into a venture without a sound outlook of returns backed by expert analyses, we don’t see how Zambia Airways is going to be viable. This is a bad business and it must be stopped in it’s tracks.




1
Comment on article

Comment on article:

  Subscribe  
newest oldest most voted
Notify of
Ray
Ray

You are absolutely right. Let them give us the investment appraisal of this investment. Otherwise it doesn’t make sense. They are stealing. I

Send this to a friend