More talk but less action on the ground. This is a typical case of Malawi’smining and quarrying sector.
For the past years, almost each minister responsible for this sector and other senior government officials, have highly touted mining sector’s potential to contribute towards the national wealth as measured by real gross domestic product (GDP) growth.
“Malawi is richly endowed with high-value mineral resources which constitute an important source of wealth for development and foreign exchange.
“It is, therefore, the wish of government to prioritise the exploration of minerals if we are to increase the contribution minerals can bring to the economy,” said Minister of Natural Resources, Energy and Mines Aggrey Masi.
To him, the sector, if prioritised, could contribute over 20 percent to the economy.
Masi is not alone in this similar buzz of rhetoric on mining sector. In 2013, the then vice-president Khumbo Kachali sung the same song.
When he inaugurated the Airborne Geophysical Survey in May 2013, Kachale boldly said the mining sector was expected to contribute 20 percent to GDP and foreign exchange reserves.
In almost all fora to do with mining, it became predictable that government officials would paint a rosy picture of the sector’s expected contribution to GDP of 20 percent in a few years to come.
But that was and is never the case on the ground at least going by figures.Real sector performance for the past years portrays mining sector as an industry that has suffered from stunted growth.
Between 2015 and 2018, there are only a few sectors whose contributions to GDP were somehow significant. These are agriculture, forestry and fishing, wholesale and retail, information and communication and manufacturing.
Mining and quarrying sector’s contribution still remained meagre and even below one percent.
While the agriculture, forestry and fishing sectors, for example, contributed 28.7 percent, 27.9 percent, 28.3 percent and 27.2 percent in 2015, 2016, 2017 and 2018, respectively, on one hand the mining and quarrying sector was struggling to expound its much-touted potential and contributing only 0.9 percent between 2015 and 2017, before a further marginal reduction in terms of its contribution to GDP to 0.8 percent in 2018.
Looking at these figures, one fears for the death of the mining sector, whose contribution to GDP once rose to 10 percent due to the opening of Malawi’s first ever mining investment venture, Kayelekera Uranium Mine in Karonga.
The mine, which ceased uranium exports way back in 2014, is still placed on care and maintenance.From a different perspective, mining sector growth is also wobbling.
Figures compiled by the National Statistical Office (NSO) and Department of Economic Planning and Development show that the sector grew by 1.1 percent, 0.4 percent, 1.6 percent and 2.3 percent in 2015, 2016, 2017 and 2018, respectively.
Government is never short of justifying such worrying economic trends.
“Growth in this sector has been undermined by competition from imported coal even though some companies have resorted to buying coal locally,” reads the 2018 Malawi Government Annual Economic Report.
Regionally, countries such as Zambia, Tanzania and Mozambique continue to feel the significant impact of their respective mining sectors.
Zambia, for example, has consistently nurtured the sector’s contribution to GDP by an average of 12 percent.
Ministry of Natural Resources, Energy and Mining spokesperson Sangwani Phiri paints a bright future for a sector that is wallowing in sheer underperformance.
“The sector’s contribution to GDP is promising to grow because of a number of projects that have been lined up in this sector,” he said on Tuesday.
Phiri said the prospects are high that growth would emanate from major exploration works that have recently been identified at Malingunde in Lilongwe, Mkango Resources’ rare earths project, among others.
But Phiri admitted that with Paladin’s Kayelekera Mine in the equation, the country saw mining contribution to GDP growing to 10 percent, which he said was a substantial contribution.
Chamber of Mines and Energy coordinator Grain Malunga, who is also former minister of Natural Resources, Energy and Mining, is on record as having questioned the exclusion of mining sector as one key priority in the Malawi Growth and Development Strategy (MGDSIII).
He said such an exclusion is a lost opportunity for Malawi as it could have assisted the country in consolidating gains and progress accrued in MGDSII, which embraced mining as one key priority areas.
But former Natural Resources Committee of Parliament chairperson Victor Musowa said mining is mentioned in MGDSIII, but argued that government did not want to be over-ambitious on mining issues.
“Most of what is happening in mining sector is exploration and not mining. Mining is a long-term process but it is achievable for Malawi.
“What is happening now is that we are rediscovering our mining sector and this begins with exploration before the actual mining,” he said on Tuesday.
The passing of the Mines and Minerals Act offers a new dawn to Malawi’s mining sector, as Musowa envisions.
The Reserve Bank of Malawi (RBM) acknowledges that the Department of Mines has put in place a number of interventions to boost growth in the sector.
RBM also said the passing of the Mines and Minerals Act will encourage transparency and attract more investors in the sector.