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Friday, 24 July 2009

A new government bank for farmers, 3rd Edition

We first discussed this proposal here advanced by Ben Kapita and then Caleb Fundanga dismissed it here, due to “moral hazard” concerns. Well that idea has substantially grown legs as evidenced by recent exchanges in Parliament, presumably championed without Caleb’s support. As my view is well established on this one, I’ll step aside and hear new voices:
Mr Kakusa (Kabwe Central) asked the Minister of Agriculture and Co-operatives when the Co-operative Bank would be reopened to support farming investments.

The Deputy Minister of Agriculture and Co-operatives (Mr Mulonga) : Madam Speaker, the Co-operative Bank will reopen as soon as the Government pays the outstanding K30.1 billion out of the initial K60 billion owed to the Zambia Co-operatives Federation (ZCF). The settlement of the K30.1 billion is awaiting the verification of the figure by the Auditor-General and clearance by the Attorney-General.

Dr Scott (Lusaka Central): Madam Speaker, I think virtually all agricultural credit institutions which this country has ever put in place, whether it is land bank, call it organisation of Zambia, Lima Bank and Co-operative Bank, have all gone bankrupt because they have lent money which is not being, essentially, repaid. What medicine, magic and juju does the ministry now have that will make it reopen the Co-operative Bank of this town? A co-operative bank that can flourish.

The Minister of Agriculture and Co-operatives (Dr Chituwo) : Madam, the role of agricultural credit banks needs to be appreciated. From history, we have learnt very good lessons with regard to instilling discipline in our citizens who get credit. Since our motivation is to empower a small-scale farmer and prioritise agriculture as the vehicle for socio-economic development, we cannot give up, but try to find a remedy for those bottlenecks that have been identified from our history. Our history shows that we do not have a good lending culture. Thank you, Madam Speaker.

Mr C. K. B. Banda, SC: Madam Speaker, regarding the fact that this bank closed more than a decade ago, may the hon. Minister tell us whether it will take another ten years to verify Government’s indebtedness to the Zambia Co-operative Federation (ZCF)?

Dr Chituwo: Madam Speaker, I am convinced, it will not take a decade to have this bank reopened. As a matter of fact, the Attorney-General is already verifying this credit that we have. If the hon. Member for Chasefu can bring another question in terms of the details, we will be able to provide the answer. Thank you, Madam Speaker.

Mr Matongo (Pemba): Madam Speaker, it is always exciting to have a revival of the Co-operative Bank debt. There is K30 billion at stake as of now. Somebody must pay the K30 billion in order to revive this bank. Could the hon. Minister be a little clearer so that we can give him advice on how to handle this money and come up with the management and board for the bank, thereafter? Will the bank be ran strictly under the Financial Services Act? I need clear answers.

Dr Chituwo: Madam Speaker, this bank is under liquidation and so what we are doing is paying the liquidator. When that is done, then certainly the normal procedures of reopening a bank will be followed. Thank you, Madam Speaker.

Mr Kambwili: Madam Speaker, both the hon. Deputy Minister and of course the hon. Minister in their answers alluded to the fact that they are waiting for the clearance of the Attorney-General. Since when did this Government start taking the Attorney-General’s advice seriously since in a recent case, we were told that his advice is not mandatory?

Dr Chituwo: Madam Speaker, I think the hon. Member for Roan is getting a bit confused.

Mr Kambwili: No. It is you who is confused.

Dr Chituwo: I have provided the answer as requested by the hon. Member for Kabwe Central and there is no ambiguity in it. Therefore, bringing in an unrelated matter is not necessary. As far as we are concerned, we continue to receive expert advice from the Attorney-General’s Office and that is how it will be. Thank you, Madam Speaker.

Mr Kambwili: When it suits you. .

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