The Decline of Mpulungu Harbour Corporation Limited

The audit report covering the financial years ending on December 31st, 2021, and 2022 sheds light on the financial performance of Mpulungu Harbour Corporation Limited (MHCL). Owned entirely by the Industrial Development Corporation (IDC), MHCL oversees Zambia's sole water-based port, playing a pivotal role in connecting the country to a regional market encompassing the Eastern Democratic Republic of Congo, Burundi, Western Tanzania, and extending to Rwanda and South Sudan.

MHCL's primary function involves facilitating the movement of cargo imported or exported through the Lake Tanganyika Transport Corridor. This encompasses a wide array of goods including cement, sugar, coal, various construction materials, as well as perishable items like poultry and fish.

The report reveals a stark decline in MHCL's profitability, with a staggering 93% reduction from over K4 million in 2021 to approximately K363 thousand in 2022. This significant downturn is primarily attributed to a notable decrease in cargo volume passing through the port, declining from 231,000 metric tons in 2021 to 185,000 metric tons in 2022.

Furthermore, the audit findings expose MHCL's failure to meet revenue targets, with a shortfall of over K1 million in 2021, representing a 2% deficit. This situation exacerbated in 2022, with the company falling short of its budgeted targets by over K17 million, marking a 28% deviation from projections.

During the period from January 1st, 2021, to December 31st, 2022, MHCL also failed to meet its income budget by over 11 million. The report highlights a decline in revenue from K66.9 million in 2021 to K45.1 million in 2022, while other income witnessed a slight increase from K3.2 million to K3.8 million during the same period.

Moreover, MHCL's turnover ratio, a measure of asset efficiency, plummeted from 1.6 in 2021 to 1.1 in 2022, indicating a diminished effectiveness in utilizing assets to generate revenue.

In summary, the audit report underscores significant financial challenges faced by MHCL, characterized by plummeting profits, revenue shortfalls, and declining asset efficiency, painting a concerning picture of the company's financial health and operational performance.