Allegations in AG’s report inaccurate – Mikalile

Allegations in AG’s report inaccurate – Mikalile

MIKALILE Trading Investment proprietor Stephen Mikalile says the allegations cited in the latest Auditor General’s report on Zambia’s external debt against the company are not accurate.

And Mikalile says his company will continue conducting business in many other countries and not just in Zambia.

Meanwhile, Mikalile has lamented that load shedding is negatively affecting businesses, especially those dealing in perishable commodities.

The Auditor General’s report on Zambia’s external debt stock for the financial years ended December 31, 2006 to 2022 revealed that on October 27, 2017, the Ministry of Education signed a contract with Mikalile Trading Company worth US$401,838,720 for the supply and installation of school materials and equipment. However, it was observed that the contract was overpriced by US$59,823,026.16.

The report stated that Mikalile Trading Company supplied desktops and laptops valued at US$45 million and US$39 million, but the authenticity of the equipment supplied was questionable as some were not in working condition at the time of delivery or shortly after delivery.

In response to a query regarding this report, Mikalile stated that the allegations were inaccurate, further arguing that all the items delivered to the 10,000 schools countrywide were inspected and approved.

“The allegations reported are not accurate. We had a pre-inspection process, conducted by Ministry of Education officials, prior to delivery. All the items delivered to the 10,000 schools countrywide were inspected and approved, thus countering the claims of undelivered, non-installed, or poor-quality items. Delivery and Specification Compliance: All items were delivered in accordance with the contract specifications. This can be proven by the pre-inspection report in the possession of the ministry. The Ministry of General Education determined the allocation of goods to the various schools. We then did the distribution according to the Ministry of General Education’s delivery schedule. Documentation was meticulously kept, with three copies of delivery notes prepared for each transaction for Mikalile Trading Ltd, the Ministry of General Education and the respective school thereby ensuring full accountability and traceability,” he stated.

Mikalile lamented that the AG’s report was conducted without any consultation with Mikalile Trading Limited, thereby failing to reflect the actual financial terms agreed upon.

“Regarding the allegations of overpricing and incorrect interest rates, it is essential to highlight that the audit was conducted without any consultation with Mikalile Trading Ltd. This oversight not only questions the audit’s impartiality but also fails to reflect the actual financial terms agreed upon. The contract specifies an interest rate of 5.35 percent annually, significantly lower than comparable market rates, such as those for euro bonds, with a payment plan structured over 10 years and a 3-year grace period. We advise journalists to engage in thorough follow-ups with the necessary ministries to obtain a complete and accurate picture. This approach will ensure that reporting reflects the full context and operations as they were contractually agreed and executed,” he stated.

And in an interview, Mikalile said his company would continue conducting business in many other countries and not just in Zambia

“We’re doing business with government in many other countries, not only in Zambia and that will continue where there’s opportunity, it’s not only in Zambia. When it comes to capital raising, you can raise it by going on the stock market and you can list your company or you can go to the public where you start selling like groceries so that you sell fast, or you can see where it’s available, you look at government contracts. You [can] participate in the tender and you win it. You’re not limited to the country in which you’re domiciled. You can do it in any country. That’s why we do it in many other countries. Before we even started doing business in Zambia, we were doing business in other countries,” he said.

“We’re just coming from pandemic and the country was greatly affected. We think we’re going to recover, then we’re hit by another calamity which is drought, which has affected the power generation. To be honest, not only our business, the business houses are greatly affected because it has hindered productivity. If you look at our meat processing, we’re involved in the food chain from the abattoir. It means we have to now run with generators. You go to the processing plant, you have to run with generators”.

Meanwhile, Mikalile said load shedding had negatively impacted the cost of production especially for companies dealing with perishable goods.

“You go to the outlets, you have to run with generators. We have got many outlets, so the cost of production has gone high. Even the cost of selling has gone high. You can’t just lamp that cost on the…so there are just certain times when you reduce it. No matter how much you try to reduce, it has greatly affected our business and it’s very unfortunate that we’re through this as a country. We only hope this year, we will have enough rains so that at least this doesn’t prolong into April next year. Otherwise, even the growth on our economy will be affected, which is a bad thing. You can imagine, to run every generator, you have to run a generator everyday. We’re dealing with perishable goods,” said Mikalile.

“So we have to run it for the duration of the load shedding and you have to run the generator in every outlet. There’s also the cost of the generator in the beginning. Then from there, you have to run the generator through the cost of fuel. Then from that, at the production plant and the abattoir, you have to run the generator. At the production plant, not only are you producing, but you’re also stocking the raw materials and these are meat products which are perishable. So you have to run very big generators. Like at the plant, our generator is about 1,000KVA. Running a machine like that is like you’re running a small compound. So the production cost is quite high and it’s also affecting our balance sheet. These are things we never planned. Whenever you’re starting the business for the year, you do anticipation of the revenue generation and you look at the cost. No one expected that we could have these problems we’re facing as a nation”.