MALAWI: Deal stopped over al-Qaeda could impact on input plan

[ This report does not necessarily reflect the views of the United Nations]

JOHANNESBURG, 14 Oct 2005 (IRIN) - Malawi's cancellation of a US $30 million deal to buy fertiliser from a Saudi company because of its alleged links with al-Qaeda could delay a government subsidy plan for poor farmers, a senior official told IRIN.

"We are at the beginning of the rainy season and farmers will start planting anytime now - it is critical that they get the input in time. Unless alternative arrangements are made to source the fertiliser, there would be a delay in the distribution of fertiliser coupons," said Michael Kamphambe-Nkoma, Malawi's High Commissioner to South Africa.

The coupon system gives a limited number of subsistence farmers access to fertilisers at half the commercial price. Malawi is in the grip of food shortages brought on by the worst drought in a decade, compounded by the late delivery last year of fertilisers and seed. Around 80 percent of the country's workforce are subsistence farmers who depend on fertilisers to grow crops.

The government plans to import at least half the 147,000 mt of fertiliser that will be made available through the coupon system.

Finance Minister Goodall Gondwe, while reportedly explaining the efforts to deal with Malawi's current food shortages to parliament on Wednesday, said the government became aware of the Saudi Arabian firm's links with the terror group through the US-based Citibank, which refused to process the deal.

An unnamed US official told IRIN that the Saudi firm was one of several blacklisted by the US government for alleged links to al-Qaeda. American businesses are prohibited from trading with such listed companies.

Gondwe said the government had identified the Saudis because their fertiliser was the cheapest, but the government had not yet paid the firm and the money was still in the country's central bank. "We are now dealing with [fertiliser] firms from Ukraine and Thailand," he noted.

Two years ago five suspected al-Qaeda members - two Turks, a Kenyan, a Saudi and a Sudanese - were arrested in Malawi in a joint American CIA and Malawi National Intelligence Bureau operation. The men were flown out of the country.

[ENDS]