Business News

Malawi’s mining framework weak, says Hajat

A commentator has said Malawi could be an attractive destination for mining investment because of the laxity of the legal framework and governing regulations.

The commentator, Rafiq Hajat, who is also executive director of Institute of Policy Interaction (IPI), said authorities also lack capacity to regulate and monitor operations.

“[There is] rampant corruption and the centralisation of powers to approve concessions and agreement without consultation or accountability,” said Hajat, a critical voice in the mining operations in Malawi and has written a number of papers on the operations of the sector.

Hajat was commenting on the attractiveness of the mining sector in Malawi in view of a 2012 Behre Dolbear Mining Investment Index—a list of top 25 countries worldwide that attracts mining investment—which shows that the country is not attractive to mining investment.

For the past 15 years, the worldwide mining industry advisory group has been publishing an assessment for the best countries in which to invest in the mining sector.

The index ranks top 25 destinations on seven criteria of economic system, political system, degree to which social issue affect mining, bureaucratic efficiency, prevalence of corruption, current stability and tax policy competitiveness.

The report has addressed various issues that impede the country’s potential for mining investment such as currency stability, political system and corruption.

The report said the corruption is also endemic in poorer nations and those with socialistic or controlled economies or totalitarian regimes, stressing that the vice frequently extends through all strata of a society from the highest levels in government to the lower-level government officials, as well as pervading business practices.

PAL general manager for international affairs Greg Walker said the mining industry looks for a “stable, transparent and predictable political and economic climate, with clear rules and a government that can be trusted”.

But Hajat said Malawi is currently going through a transient phase in governance and is suffering from economic constriction, adding that the current situation, therefore, leaves much to be desired.

“It is imperative for Malawi to realise optimal benefit for Malawians from these finite resources with minimal impact upon our environment and minuscule repercussions in the future.

“We must, therefore, proceed with sagacity and caution lest we lose this golden opportunity to turn our fortunes around toward tangible prosperity for all Malawians,” he said.

Mining has, of late, taken centre stage in Malawi with figures indicating that the contribution of the sector to gross domestic product (GDP) could jump to 30 percent in the next five year, surpassing tobacco which currently accounts for about 13 percent of the national economy.

The sector is earmarked as one of the drivers of the economic growth in the 18-month old Economic Recovery Plan (ERP) to propel economic growth.

Meanwhile, the Malawi Government has issued 65 mining licences, 43 of which are foreign with the rest shared by local companies.

Currently, government has, among others, given exploration licences to Lancaster Exploration Limited, a 100 percent owned subsidiary of Mkango Resources Limited exploring for rare earths at Songwe Hills in Phalombe and Salambidwe in Mwanza.

Related Articles

Back to top button