The Ministry of Mining has set an ambitious target of growing the mining sector’s contribution to gross domestic product (GDP) to at least 10 percent in the short to medium terms.
Currently, according to figures from the ministry, the sector contributes a meager 1 percent to the GDP.
But presenting a ministerial statement to Parliament on Monday, Minister of Mining Rashid Gaffar said the sector had the potential to contribute between 10 and 20 percent to the GDP when all mining projects roll out.
The optimism comes few months after President Lazarus Chakwera announced plans to reform the country’s mining sector to boost the economy and crack down on rampant, illegal mining and mineral smuggling.
In his statement, Gaffar said, among other short-term initiatives, the government would roll out the National Mining Company which is earmarked to facelift operations in the sector.
He, however, said rolling out the firm would require in excess of K5 billion, an amount which the ministry would solicit from the Treasury.
“The Ministry of Mining will continue spearheading the establishment of a State-owned mining investment company whose mandate shall be promotion of optimal development of the sector and maximisation of national mineral revenue and social benefits.
“However, for this to materialise, the ministry requires K5 billion as initial seed capital to the company. To this effect, the ministry has submitted a funding request to the Ministry of Finance for consideration,” Gaffar said.
Once the company is operationalised, it will ensure advanced mineral exploration for investors and act as a vehicle for joint ventures in the mining sector.
In his address in May, Chakwera said the economy would diversify to complement tobacco for exports and that mining was the priority sector.
He said the mining sector would be revamped by allowing the Reserve Bank of Malawi to start buying gold from artisanal miners for export and operationalising and capitalising the National Mining Company.
The central bank already set a structured market for gold, through which it has been able to buy gold worth K900 million in the past three months.
In an interview Tuesday, mining expert Grain Malunga said, while attaining the target is possible, it would, however, depend on the government’s response to private sector needs.
“Some administration aspects delay the process. If issues of incentives and development agreements are hastened, it is easy to grow the sector,” Malunga said.
He also hailed the government for the move to roll out the National Mining Company, which, he said, would help facelift the sector.