Malawi to Enact Reforms in Mining Sector
By Joel Chirwa
President Joyce Banda of Malawi says her government will review laws governing mining sector to resuscitate the sector which critics say is fraught with challenges that have made the country benefit little from the extraction industry.
In her recent state of the nation address, Banda said the measure is designed to create an enabling environment for conducive, transparent and accountable mining regime in the country.
“In this regard government is reviewing Mines and Minerals Act, Petroleum Policy and Petroleum Act. My Government will ensure that the mineral resources benefit Malawians, ’said Banda.
The Banda administration move to bring sanity in the sector is seen as bowing to concerns from civil rights groups and opposition politicians who have long contended that the sector is fraught with irregularities that have made the country lose out on revenue that would have helped the country economically.
The opening of Kayerekera Uranium Mine in 2007, in the northern town of Karonga by an Australian Firm Paladin raised a lot of expectations in a country whose 40 percent of its national budget is supported by Western donors and 40 percent of the population is poor with 15 percent ultra poor.
Following the opening of Kayerekera Mine, mining activities in places where there were deposits of rare stones boomed. But little benefits or nothing according to critics trickled down to the grass root where big foreign investors firms were involved.
“The problem has been lack of proper legislation. The Mines and Minerals Act has not been finalized. The draft clearly stipulates that, among other things, communities where the mines are based should also benefit economically,” explained Minister of Mines John in a recent newspaper interview.
The absence of the necessary legislative framework had also another hiccup; the country missed out on 2012 Behre Dolbear Mining Index which lists the most preferred destinations for mineral investment.
In recent newspaper interview, human rights activist, Rafiq Hajat of Institute for Policy Interaction (IPI) said the absence of the law has created fertile ground for corruption.
“[There is] rampant corruption and the centralization of the powers to approve concessions and agreements without consultation or accountability,” said Hajat
For years, Malawi has been fueled by agriculture to drive its economy. Tobacco has been the major crop for export market. The collapse of tobacco market demand due to anti-smoking lobby in recent years has nudged the country to look elsewhere for economic salvation. Mining has been identified as a viable alternative to agriculture.
Published statistics shows that mining input to gross domestic product could leap to 30 percent in the next 5 years, surpassing tobacco which at this time accounts for about 13 percent of the national economy.
The talk of economic diversification has further taken a significant tone after it has been noted that western partners’ support to the country economy has been dwindling in recent years. Also, such support has always been tinkered with attached conditions.
The sector has been earmarked by administration of President Banda as one of vital cogs to push the economic growth in the 18 month Economic Recovery Plan (ERP) aimed at resuscitating the economy.
Realizing that most of the local mining artisans who have taken up the trade have none or little expertise, president Banda disclosed that measures have already been put into place to promote participation of local and foreign investors.
“My government is assisting small scale miners by mobilizing mining artisans into cooperatives and building their capacity in mining so that they add value to their mineral products,” said Banda.
The deal that facilitated Kayerekera was signed by President Bingu wa Mutharika regime has been criticized as skewered in the investor favor and of little benefit to the grassroots, this prompted some quarters to call for its revision.
But Paladin Malawi General Manager, Greg Walker told local media that the deal cannot be renegotiated saying the terms of agreement between the two sides agreed stated clearly that it will only be reviewed after 10 years from the time it was signed.
Meanwhile, the ministry of Mines wants the mining policy to take effect in the first quarter of 2014 which according to Minister Bande will ensure that all investors in the sectors are working in accordance with the laws of the land.
“Once we have this policy we will revisit all the mining ventures across the country to ensure they are implementing it,” said Bande.