Debate on K7 trillion agreement rages on

Finance Minister Sosten Gwengwe with BRIDGIN official

Dust refuses to settle on government’s signing of a K7 trillion ($6.8 billion) agreement with Bridgin Foundation on Monday as many quarters feel it could be one of the biggest scams in the current administration hence demanding details of the grant.

The grant is equivalent to about three national budgets pegged at K2.84 trillion and about half Malawi’s gross domestic product (GDP) at $12.6 billion.

Among others, the package seeks to finance projects in health, education and energy sectors.

The Budget and Finance Committee of Parliament and former Finance minister Joseph Mwanamvekha demanded on Monday in the National Assembly that terms and conditions for such a huge investment be made clear.

Mwanamvekha stated that what was disturbing about the arrangement is that the conditions are not known and that going through the foundation’s website as well as other credible sites, it was doubtful the institution has the capacity to provide such funds to Malawi.

He said: “In my years of experience in the financial sector as well as in government, proper due diligence is critical, but we seem to have not done this with this institution. This puts the economy at risk because as a country we could end up losing credibility and trust from development partners.”

mwanamvekha
Mwanamvekha: As a country we could end up losing credibility and trust from development partners

Budget and Finance Committee of Parliament chairperson Gladys Ganda, in a separate interview, said her committee is eager to learn the conditions attached to the grant, if any.

Dr. Naomi Ngwira one of the brokers of the deal who is the current Malawi Ambassador to the Kingdom of Belgium, explained that when she assumed her position, she found communication files on Bridgin Foundation which had interests in supporting Malawian universities and followed it up with the organization’s Programme Director.

She pointed out that Bridgin doesn’t work directly with institutions but rather with governments and they sent a verification willing and able letter to finance the outlined projects which were requested.

Speaking during a Times radio programme “The Plan” monitored on Monday evening, she indicated that thereafter, negotiations on funding and governance, power purchasing agreement were discussed at length for eight months.

She stressed that using her vast knowledge in financial matters, she vouched for the Belgium based Foundation which has an account and a physical address and is funded by an Israel foundation to help developing countries.

Ngwira who has worked as Director of debt and aid in the Ministry of Finance and Deputy Reserve bank of Malawi Governor for five years respectively insisted Bridgin is a genuine and credible institution.

credentials
Malawi's Envoy to the Kingdom of Belgium Dr. Ngwira (R) captured presenting her credentials in this file photo

“I can verify that due diligence was done in this deal and living in Belgium where the European Union’s headquarters is; if there are strict laws on anti-money laundering and illegal proceeds of terrorism, then Belgium is the strongest in the world. In my one stay here there I’ve seen a lot to assure me that its financial regulations are up to the mark.

“It took me six months to open my personal account and I was actually initially refused by banks prompting me to ask the reasons and they responded that I had not supplied enough information and they were not obliged to tell me why they had refused. I’ve seen accounts being closed due to movement of money not corresponding with regulations.

“What am driving at is for this money to come out to Malawi, it meant the EU financial regulator saw it fit and endorsed the transaction,” she said.

On whether it is a grant or a loan and what are the conditions, she confirmed this is grant but in their model it’s called Export fund build on operate transfer.

This means although they will own and operate for a time before they transfer, the money coming from the commercial arm for instance in the power component; once they pay all the operational costs for the projects, the rest  will be given to Malawi government

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Chihana: Let us not compromise the security system at the state house

According to her, the remaining funds will be used in the attainment of Sustainable development goals (SDG)’s to help women, youth, children and schools and the funds which will come out will be to pay contractors but the revenue will be for the government.

Weighing in on the matter, Mzimba North legislator Yeremiah Chihana said nowhere in the world can a government trust an entity which fails to disclose its vital information on its website.

He warned that signing documents without proper due diligence is a scam adding that it’s wrong to allow a bank to have a sovereign guarantee for Malawi.

“The questions I raised; is it a guarantee which can be revoked? If it cannot be revoked, what are the consequences, what are the costs which are associated with it? Equally what was paraded yesterday as also something which is a grant what are the commitment fees, what are the arrangement fees? Are these people really available?

“Let us not compromise the security system at the state house. Where is the Minister of Justice? Where is the Attorney General, where is the National Intelligence? Where is the financial intelligence, let alone how did the Minister of Finance authorize the President to do that?