Malawi is failing to maximise her mining potential due to low level of expertise, leaving the industry at the mercy of foreign investors, a new analysis has revealed.
This is according to the 2022/23 National Budget Analysis commissioned by the Economics Association of Malawi (Ecama), Oxfam in Malawi and the Lilongwe University of Agriculture and Natural Resources (Luanar).
The analysis, conducted by University of Malawi economics professor and former Treasury Secretary Ronald Mangani, says the “untimely opening up of the mining sector is the next curse” because there was no critical mass of trusted experts created.
He said in the analysis: “There is no public sector investment and the ownership is challenged. There
are resource limitations, we can’t fund research as a country and asset holding.
“The sector is free for all as there is no capacity to monitor dealings of investors. The sector is characterised by weak fiscal regime to negotiate and maximise State benefits.”
Apart from the losses the nation experienced at the Kayerekera Uranium Mine, Mangani pointed at how Malawi has for many years been having exploration activities, including sending mineral samples abroad for testing, but without any actual mining starting to benefit the economy.
In a written response to a questionnaire last week, Ministry of Mining Principal Secretary (PS) Joseph Mkandawire said the ministry does not subscribe to the negative perception about mining in the country as propagated by the consortium.
He said mining is a long-term business investment venture which he said takes seven to 10 years, or even more, for a mineral exploration project to graduate into actual mining.
Mkandawire said: “There are already stringent measures put in place by government in order to provide checks and balances for companies when sending samples outside the country.”
While disputing that the mining sector is being ripped off, the PS said the Geological Surveys Department inspects the samples and produces an inspection report which is submitted to the Department of Mines for further review and issuance of an export permit is based on the value of the samples.
He said: “The country has considerably sufficient mining expertise to grow the mining sector and prevent the rip-off of the mining benefits by the expatriates. Government is doing its best to train and recruit the critical mass of mining professionals in the mining governance institutions”.
Malawi Chamber of Mines and Energy national coordinator Grain Malunga also disputed the consortium’s analysis, saying the country’s mining industry is developing as there are about five companies currently at an advanced stage in developing mining ventures.
He said: “We are coming from the background of being an agriculture-based economy.
“We have been training geologists in the past, but they have not been employed, others are employed abroad as they could not find jobs locally.”
Government earmarked the mining industry as a key sector of the economy with potential to significantly contribute to economic growth.
The country conducted an airborne geophysical study in 2015 aimed at establishing the country’s mineral potential. Since then, experts have been interpreting the high resolution data obtained from the nationwide airborne geophysical survey.
The fourth Extractive Industries Transparency Initiative report released in 2021 shows that projections made in the 2014/15 fiscal year indicated that the mining sector would contribute 20 percent to the country’s gross domestic product (GDP) by 2020, but the sector only contributed just 0.8 percent in 2020.
In the 2014/15 fiscal year, when the projection was being made, the sector contributed 0.9 percent to GDP, the same in 2015/16. The sector also contributed 0.9 percent in 2016/17 fiscal year and down to 0.8 percent in the 2017/18 fiscal year.