THE Parliamentary Public Accounts Committee has heard that the Development Bank of Zambia (DBZ) failed to fully recover a loan of K17 million from KIFCO Packaging of Kabwe in order to save the workers’ jobs.
Ministry of Finance Permanent Secretary Ronald Simwinga said this yesterday when he appeared before the PAC chaired by Luena Alliance for Democracy and Development (ADD) Member of Parliament (MP) Getrude Imenda.
Mr Simwinga said that DBZ could not apply punitive measures against KIFCO because the action could have resulted in loss of employment.
DBZ appeared before PAC to respond to audit queries raised in the 2013 Auditor General’s report that highlighted that KIFCO owed DBZ K17.4 million.
He said KIFCO was the single largest employer in Central Province and closing it down could have led to massive unemployment.
That, Mr Simwinga said, would have gone against the Bank’s and Government developmental objective of employment creation.
He said DBZ has since converted half of the loan into preferential equity share capital to ease the pressure on KIFCO and leaving the rest as an outstanding loan.
Mr Simwinga said since the loan became operational in the third quarter of last year, production at the company had improved and so had the company’s cash flow.
Other companies owing DBZ are Zambian Airways (18 million), a matter which was now in court and Mofu Industries owing US$ 110, 918.
Meanwhile, PAC took Mr Simwinga to task for maintaining George Chabwera on the DBZ board while he was serving as board director of a bureau de change contrary to the law.
Ms Imenda said serving as director on two boards in the financial sector was a crime and wondered why Mr Chabwera had not been removed when the Bank of Zambia observed the anomaly.
DBZ managing director Jacob Lushinga said the board had since completed its term while Mr Simwinga said it was unfortunate that the matter had taken long to be resolved but assured the committee that Mr Chabwera would not be allowed to continue in both positions.
United Party for National Development Mwembeshi MP Austin Milambo said DBZ should also recover the allowances Mr Chabwera got while serving on two boards.
Why do they loan Zambians anything? Lending money to a thief is same as safe keeping condoms with a prostitute and hoping they will return sealed ones to you.
As always the armchair critics from the Diaspora are quick to comment. Shame on you fellas, at least people back home are trying.
The question to ask is that does the DBZ approve loan applications without appraisal of sound business plans that are able to repay the loans? A loan is a loan, there are no other considerations. The failure by KIFCO to repay the loan also meant that the money could not be circulated to create more employment by other businesses that needed to access financing. No double standards, if you have taken Zambia Airways to court for default, do the same with KIFCO. Recover the loan.
KIFCO is still operational, Zambian Airways is not, that’s why.
Btw, is the Kifco Club still operational, anyone? It used to go down at that Club; a couple of Mosi (we assumed, because it was not labeled), some Hungarian sausage with salads and good live music!
Yeah groovy…
I am shocked that a right thinking financial institution can ‘convert’ their loan into equity without added measures! DBZ should have put in place a manager redesign the reporting procedures and ensure the debt/loans committee sits on the Board of Directors of Kifco….to ensure that the company continues to operate but at the same time services the loan, to give ‘relief’ to the same people who took it down the debt path is suicidal!
@Vizunga, Zambian Airways is under liquidation and can still be sued.Thats Law.
@Kalu, I am with you 100%!
The issue I was responding to is, ‘…No double standards, if you have taken Zambia Airways to court for default, do the same with KIFCO. Recover the loan.’.. by @Misango yaba…
KIFCO is operational, therefore a different approach can be taken to recover the money. Zambian Airways is not operational (under liquidation) so a different approach (Court) has been taken…
Kifco Club, anyone…?
Why allowing somebody to serve on two boards and who appointed him to serve on two boards? This is how low this country has sunk in terms of good corporate governance.
Cry my beloved country
Sounds like the law forbids anyone from serving as director on TWO BOARDS in the FINANCIAL SECTOR! I would like to ask: What about the Permanent Sectary at the Ministry of Finance, does he not sit on more than one board in the financial sector?
There is something fish going at Zambia development Bank(ZDA).The reason these loans are not successful is simply because DBZ is very partisan and corrupt in the way they offer these loans. How come is that only politicians are the majority clients. How many youths with viable business plans have been awarded these loans? the answer is a few if not zero. I wonder they are even called development bank ,which development are bringing to Zambia. Employ a very prolific and well qualified director at DBZ and put credible board members to reposition this Bank, you will see that a lot entrepreneurs will sprout through out Zambia. We need the young Dangote’s of Zambia.
Oh, I didn’t know politicians get loans from DBZ! Do they get personal loans? Does DBZ give out personal loans? But yeah you are right, there is always something fishy about DBZ. The Bank went under, was recapitaised and rebranded, but it seems the same s*** still goes on…
In a country of 13 million people there is a clique of about 20 men and a few women sitting on all the boards of directors. It is like musical chairs. These people like Tom Mtine, George Chabwera, Bishop Mambo, William Nyirenda, George Chisanga, etc have curried favour with every government. Some are directors on four of five institutions. The same people running the economy.
ECL WILL CHANGE ALL THIS NONSENSE. THERE ARE SO MANY OF US QUALIFIED AND WITH EXPERIENCE TO SERVE BETTER.
The same failed brains literally on all boards! Then why do we wonder when our economy crumbles?
The first time in my life to hear a financial institution that is not interested in its money! A financial institution which does not care about recovering its loans. Great institution, indeed we need more institutions like DBZ so that our country can “develop”.
….the way the article comes out is as if KIFCO have to pay back this loan as lump sum.. BOOM.. $17m….such loans are paid in piecemeal….we are being told that the company operations and liquidation have improved…meaning its making profit….all what DBZ need to do is to revise the terms of repayments taking into account the vulnerability of KIFCO if they had to ‘squeeze’ it with the current terms…. now I see what could have happened with Zambian Airways…the same approach could have been applied…
…sorry meant to say …’liquidity’…
George Chabwera is not an illiterate but a learned man who should have avoided to find himself in such a situation. The problem we have in this country is that people are ready to sacrifice their integrities for a few pieces of silver. Yes, let him pay back all the allowances he got from serving on two boards.
Chabwera is a learned man but also greedy. He always want preferential treatment and he will demand allowances that he is not even entailed to so let him pay back.
He is educated not learned but this is how he has always survived ‘sitting’ on boards
The abuse of authority by the coridals of power of the poorl-governed zambia is hardening the standard of living of the fully entitled zambian citizens!!!!!!
How can one person serve in two critical positions when other suitably qualified persons are there? This is greediness at its climax,this is biased and unacceptable in the country!!!!!
The pf government from the time of its regime has deteriorated the good image of the state by utilizing the leaders bracketed with the spirit of selfishness!!!!!
It is clear that zambian leaders are just interested in filling their pockets than the entire zambians this is indicated in the reality of having one man serving in two positions!!!!!
People are suffering from lack of employment while other old *****s are holding to highly-paid…
Pa Zed muntenkunya,kulaloleshafye
So they are many bad loan creditors. Why have they only been talking about Zambian airways? This is selective justice. That’s why Zambia is going nowhere.
Foolish and corrupt way of thinking and covering up defaulters. The guy got kickbacks. They should have sold the company as a going concern to investors
The Directors of Zambian Airways have been so vocal and in the forefront of persecuting other citizens with their know it all attitude assisted by their paper ‘The Past’. That is why the spotlight was on them.
When an institution borrows, there is security (collateral) provided in the case of default. DBZ was supposed to realise the collateral when kifco defaulted. From the way things looks, it’s like the company itself was the collateral meaning that realising the security meant closing the company and selling the assets. This is poor collateral perfection and securitisation and the legal counsel and board must be fired.