The director of Finance at the Gambia Groundnut Corporation (GGC) has revealed that the Corporation's total operation income in 2011 was D497, 141, 676 compared to D264, 688, 130 in 2010.
Amat Njie made this revelation on Monday while presenting the GGC annual audited financial statement for the year ended 30th September 2011 before the Joint Session of the Public Accounts and Public Enterprise Committees (PAC/PEC) of the National Assembly. He also said that the total expenditure for the year 2011 was D136, 134, 393 compared to D102, 240, 658 in 2011.
Delivering the annual activity report earlier before the Committee, Anthony G. Carvalho, the managing director of GGC, said following several attempts to privatise the Corporation, which could not materialise to the satisfaction of all stakeholders, the Corporation was given the responsibility of marketing groundnuts by buying from producers handling, processing and selling the derived groundnut products to both local and international markets.
He explained that the mandate to determine the producer price for groundnuts and the starting and closing dates for each season rests with Agribusiness Services and Producers Association (ASPA).
His words: "GGC planned to purchase between 30, 000 and 40, 000 tonnes of groundnuts in shell based on earlier crop surveys carried out by the Corporation and groundnut production data received from the Planning Unit of the Ministry of Agriculture."
In deciding on the above tonnages, Carvalho said further consideration was given to all limitations in terms of volumes the available infrastructure could handle. He said the Corporation contracted with the Cooperative Produce Marketing Societies (CPMS) for the purchase of groundnut from its members, adding that it also bought from producers and private traders, most of whom were self-financed.
"For the year under review, the buying period as announced by ASPA started on 21st December 2010 and ended on 30th April 2011," he further stated, adding that the CPMS and the private traders delivered to the depots where inventory controls usually take place. Carvalho revealed that the total purchase for the year under review of 36, 951 tonnes was within the planned tonnage and was 9.6% higher than that of the previous year of 33, 710.
Crop finance management
He further told the Committee that in its effort to mitigate the high cost of crop financing from local commercial banks, GGC through the Ministry of Finance and Economic Affairs arranged for a crop purchase financing facility from International Islamic Finance Corporation (ITFC), a private window of the Islamic Development Bank (IDB).
"Although prior to the start of the 2010/2011 season, this arrangement was at an advanced stage, it could not be concluded in time in order not to delay the start of the season, GGC therefore sought and obtained bridged financing from local banks to the tune of D470 million but only utilised D333.5 million," he stated.
Carvalho informed the PAC/PEC that subsequently, ITFC approved the requested facility to the value of US$14 million revolving under Murabaha Agreement for a maximum period of two years with the mark-up for the facility as 6% per annum. "The total cost, including arrangement and facility monitoring fees was less than 7.5% compared to local banks charging of interest of 20% to 21% per annum. Each drawdown payable within a period of six months," he added.
The GGC boss explained that the CPMS and private traders are the links between GGC and the producers for effective groundnut purchases, adding that as a result of the institutional and financial weakness of the CPMS, it was realised that they do not have the capacities to raise funds to purchase groundnuts from their members and sell to the Corporation. "GGC therefore provided pre-financing to the CPMS and four private traders who were able to provide sufficient collaterals to meet the level of exposure," he remarked.
Crop finance loans repayment
Carvalho said the performance of the GGC with regards to this facility was so impressive that, Islamic Finance News in collaboration with IDB/ITFC awarded GGC 'African Deal of the Year Award 2011', which was presented to its managing director in Dubai. With regards to the local banks, he said there were balances to be paid due to several factors, among which were unpaid subsidies for two consecutive years, high interest rates of the loans and those brought forward from previous seasons.
He informed the Committee that GGC has a work force of 203 personnel on permanent basis and an additional 358 on seasonal and daily rated contracts during the marketing season.
According to him, the work force is aged especially at the top where it is extremely thin, which he said has been as a result of previous attempts at privatisation, which resulted in the flight of trained work force for reasons of job security. "Now that the privatisation is on hold and the situation is changing for the better, management has started recruiting and training some of its staff locally, to the level that constrained resources will be able to support," he added.
He noted that the Corporation's handling, transportation and processing infrastructure is almost obsolete as most of it were purchased and installed in the 1960s and 70s during the time of Gambia Produce Marketing Board, noting that these machinery, plants and equipment have outlived their usefulness and economic lives resulting in low availability and high maintenance costs.
Groundnut Production and quality
He added: "The quality of the Gambia groundnut needs urgent improvements. Asresult of the low national production volumes, the country's comparative advantage lays in the maximisation of HPS/edibles export to the international market, noting that the yield of HPS per tonne of groundnut on kernel basis is less than 20% compared to the industry norm that ranges from 40% to 60%."
The GGC boss said The Gambia used to have a commercial groundnut crop excess of 90, 000 tonnes per annum. However, he said in the past years, this has dropped drastically to less than 40% of the quantity.
Despite the constraints, he said GGC has achieved a lot in increasing the volume of groundnuts handled from 33, 710 tonnes in 2009/2010 to 36, 951 tonnes during the year under review, with corresponding increase in revenue. "There is a commitment by management and the entire staff alike to continue to work with renewed dedication, selfishness, honesty and integrity to move the groundnut industry forward for the benefit of the institution, producers and the national economy," he concluded.
Samba JB Tambura, an assistant compliance officer from the Gambia Public Procurement Authority (GPPA), said GGC was found to be non-compliant with the GPPA Act and Regulations for the year under review.
Committee members then raised questions, concerns, observations, and recommendations, which were responded to by the GGC officials before finally adopting the report.