By XAVIER MANCHISHI –
THE latest Auditor General’s report has revealed that the K3, 732, 208, 920, 368 Eurobond which Government issued in 2012, has been under utilised and in some instances diverted.
The Development Bank of Zambia (DBZ), for example, received an on-lent loan of K104, 511, 200 from the proceeds of the Eurobond for onward lending to Small and Medium Sized Enterprises but as of July 2014, only K73, 857, 989 was disbursed.
The Subsidiary Loan Agreement between Government and DBZ required the Bank to provide the Government with a detailed lending framework on how the institution would utilise the loan proceeds and the criteria it would use to lend to the SME’s.
“However, as of September 2014, the Bank had not provided the Government with a detailed lending framework. In addition, there was no evidence of follow up by the Ministry of Finance,” the report reads.
DBZ also disbursed K10, 000, 000 to two Financial Institutions Microfinance Zambia Limited and Cavmont Bank yet the agreement was that the Bank would exclusively use the loan proceeds to extend loans to SME’s.
According to a correspondence between the Secretary to the Treasury and the DBZ Managing Director, the Bank experienced delays in disbursing the Eurobond proceeds because of protracted negotiations with SME clients in order to package collateral.
The delay in the utilisation of the funds from the Eurobond entailed that DBZ failed to generate returns in good time to enable the Bank meet its repayment of interest and principal to Government, as the Bank was required to commence repayment in Septmeber 2014.
The Ministry of Health received K170, 357, 956 from the Eurobond proceeds for the rehabilitation of the hospitals including the University Teaching Hospital, Livingstone General, Ndola Central and Kitwe Central.
However, the four contracts the ministry signed for the rehabilitation works at UTH amounting to K72, 053, 164 and the US $ 11, 729, 211 contract for the supply of 42 Advanced Life Support Ambulances had no clearance from the Attorney General.
Zesco was funded a total of K368, 094, 300 for the construction of the power distribution network but by December 2013, the corporation had not carried out any construction or rehabilitation works.
The latest Auditor General’s report also reveals that the Tanzania-Zambia Railway Authority used part of the K60, 618, 400 from the Ministry of Finance meant for recapitalisation to pay salary arreas to the Zambia Cost and Profit Centre.
“The payment of salary arrears was not in line with the purpose for which the Government disbursed the funds as there was no Authority from the Secretary to the Treasury to use the funds for activities other than recapitalisation of TAZARA,” the report adds.