In a covert operation that has raised significant questions, Nitrogen Chemicals of Zambia (NCZ), a government-owned entity, has clandestinely acquired a staggering 20,000 metric tonnes of Compound D fertilizer in recent months from United Capital Fertilizer (UCF), a private firm that holds a government contract to produce 77,000 metric tonnes of Compound D fertilizer.
This development comes amid conflicting information, as official announcements suggest that NCZ is slated to manufacture 43,000 metric tonnes for the government-funded agriculture support programme.
Rumours of government fertilizer contracts being awarded to private firms with strong ties to the ruling parties have circulated in Zambia for years. However, the full extent of how the government leverages NCZ as a strategic instrument has been shrouded in secrecy—until now.
The Quiet Machines
In early September 2023, an unusual calm settled over the NCZ fertilizer plant in Kafue town. This large factory, established in 1969 and operational since 1970, is typically a hub of noisy machinery, especially during this time of the year. However, at that moment, the massive machines stood still, their usual clamour replaced by an unsettling silence. The cause? A vital ingredient required for making Compound D fertilizer - ammonium sulphate was conspicuously absent.
This deficiency was just one of the many challenges the company is confronting this year. It was a challenging period for NCZ, grappling with an ongoing scarcity crisis that threatened to strangle the vitality of this industrial giant, hampering its ability to operate effectively.
On 06 September, while MakanDay was in Kafue town, six loaded trucks had arrived the previous day, carrying the precious ingredient bought from UCF, one of the country's only two functioning fertilizer plants.
However, the flicker of hope they brought would prove to be short-lived, lasting no more than a single day, according to a source within the company.
While other essential ingredients like MOP (Muriate of Potash), MAP (Monoammonium Phosphate), and clay used in the production of Compound D, which mainly serves as basal dressing for maize farmers, are readily available, the sourcing of clay, often obtained locally, has tended to benefit companies associated with the ruling party.
This practice, as revealed by a source within NCZ with over seven years of experience, has persisted across different governing parties and has continued even under the United Party for National Development (UPND)-led government.
NCZ is owned by the Industrial Development Corporation (IDC), responsible for managing all government-owned enterprises. The IDC explained that the decision to enter into a contract with UCF was prompted by delays in finalising the FISP (Farmer Input Support Programme) contract, resulting in a loss of production time.
Namakau Mukelabai, the head of corporate communication at IDC, said in a written response to MakanDay that, "To mitigate the loss of production time and meet the delivery deadlines, NCZ chose to subcontract a portion of its FISP allocation to UCF, which was permissible under the Ministry of Agriculture contract".
Artificial Bureaucracy Fueling the Issue
The Attorney General holds the pivotal legal authority responsible for approving all government contracts. Interestingly, in the fertilizer sector, the procurement bureaucracy created by this office appears to benefit UCF, a company owned by Chinese interests and influential Zambians. UCF is also involved in the production of fertilizer in Zambia.
The Attorney General is yet to respond to a set of questions from MakanDay, including why it took his office so long to approve the contracts for NCZ.
One of the sources with close ties to Nitrogen Chemicals raised questions about why the UCF contract for fertilizer supply to NCZ was executed at ‘a remarkable speed,' whereas it took several months to finalise a contract for the government’s own company.
"The contract with United Capital Fertilizer was signed just last Friday (September01), and by Saturday morning the following day, Nitrogen Chemicals' officers were already present at United Capital to observe the start of production," remarked the source from the workers' union during an interview at the largely dormant shopping centre at Kafue Estate.
"Why this strong support for Nitrogen Chemicals' competitor while risking our (government)’s very own company?” He asked.
The shop owners within the shopping centre and the youth population in Kafue are in dire need of the few jobs provided by NCZ in this once-thriving town, which flourished during the reign of the United National Independence Party (UNIP) government. While many state-owned industries, including the vibrant Kafue Textiles, remain shut following the privatisation programme initiated by the second President, Frederick Chiluba's government in the early '90s, NCZ still clings to government life support.
"What deeply concerns many of us at NCZ is the manner in which the company is being managed," said a source, an employee at NCZ, who wished to remain anonymous to protect his job.
"While we continue to receive our wages even during periods when the plant isn't producing fertilizer, there's a looming anxiety about job security, as the government could potentially cease our payments at any moment."
His anxiety, represents the sentiments of over 400 workers, who are concerned that the company's future is uncertain if the current management approach persists.
Consistent Patterns Across Administrations
Zambia's successive governments have persistently used state-owned enterprises, such as NCZ, as a means of financial benefit for ruling party officials, who frequently secure contracts from these companies.
Consequently, production constraints are currently gripping NCZ, posing a threat to a government contract awarded to it in June this year, for the manufacture and delivery of more than 43,000 metric tonnes of fertilizer as part of the government-supported Comprehensive Agriculture Support Programme (CASP) for the 2023/24 crop season.
Chanda Mungo, the Chief Executive Officer of NCZ, explained to MakanDay that the company has achieved a total production of 21,541.75 metric tonnes of Compound D fertilizer this year.
Additionally, he confirmed that NCZ has procured 19,716.15 metric tonnes of Compound D fertilizer from UCF to fulfill the contracted tonnage required for government delivery.
Furthermore, IDC’s Mukelabai clarified that although IDC holds a minority share in Marcopolo Tiles, there is no corporate affiliation between IDC and the Wonderful Group of Companies, nor does it maintain any corporate affiliation with UCF”.
According to the official company website, both UCF and Marcopoloare are owned by Wonderful Group of Companies.
United Capital's Ownership Structure
The shareholders of UCF are two companies Boffar Machinery Equipment Zambia Limited and Wonderful Group of Companies.
Its directors are five Zambians - Mapange Nsapanto (secretary), Robert Rabson Zulu, Joseph Mbinji, Roy Chisanga Mwamba, Frank Mulenga and Chance Kabaghe, and three Chinese nationals, Yaochi Huang, Jingwen Zhao, and Lingling Zhang.
Some of the directors in Boffar, including Yaochi Huang and Nsapato are also directors in UCF.
UCF has not provided any responses to MakanDay’s inquiries and the director, has not returned phone calls.
The Minister’s Actions
On June 14, 2023, Agriculture Minister Reuben Mtolo Phiri officiated at the distribution of over 43,200 metric tonnes of fertilizer at NCZ in Kafue. During the event, Phiri emphasised that this early distribution of inputs would empower farmers to prepare for this year's planting season well in advance.
Only a week prior, the minister had undertaken a similar task at UCF for the distribution of 77,000 metric tonnes of fertilizer for a contract awarded to the company. He highlighted that this substantial allocation would serve more than 513,000 farmers across the Eastern, Northern, Southern, and Western Provinces of the country.
NCZs' Compound D fertilizer is slated for distribution to over 288,000 farmers across 41 districts spanning Northwestern, Muchinga, Luapula, and Copperbelt Provinces.
MakanDay has further established that the fertilizer that was displayed during the distribution ceremony was actually produced in the previous year.
The minister has not responded to MakanDay’s questions, including the reasons behind the government’s apparent preference for UCF in the fertilizer sector.