By Mcloyd Chilangiza:
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI)—an umbrella body for private sector players— has commended efforts by the government in creating a sovereign wealth fund.
The fund is a state-owned investment window to be used for managing the country’s surplus reserves to generate economic benefits for its citizens.
It includes a pool of money mineral proceeds, bonds, stocks and other financial instruments set aside to invest for the future.
In its commentary on the State of the Nation Address (Sona) presented last Friday by President Peter Mutharika, MCCCI said the establishment of the fund aligns with its proposal for a private sector-driven investment fund aimed at mobilising domestic capital for strategic participation in mining ventures.
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“During the pre-budget consultations, we proposed that the government should facilitate the establishment of a pooled private investment fund to finance critical infrastructure and stabilise the economy during external shocks.
“The Sovereign Wealth Fund proposal fully aligns with that vision,” reads part of the MCCCI commentary.
The confederation also commended reforms such as auditing mining licenses and restricting the export of raw minerals, noting that the measures point towards value addition which could boost private sector investment.
Commenting, mining policy expert Paul Mvula said the sovereign wealth fund would finance infrastructure development and stabilise the economy during external shocks.
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Mvula, however, warned that its success would depend on a strong legal framework, transparency, public reporting and insulation from political interference.
“We need clear laws defining the purpose of the fund, withdrawal rules and strict parliamentary oversight. Without transparency and protection from short-term political pressure, the fund risks suffering the same fate as other politically managed funds,” he said.
Speaking recently, political scientist Henry Chingaipe suggested establishment of proper systems to optimise mineral resource utilisation for national benefit.
Meanwhile, the Malawi Mining Investment Company (Mamico) recently revealed that the country loses potential revenue exceeding $700 million (K1.2 trillion) annually through gold smuggling.
The mining sector roughly contributes about one percent to Malawi’s Gross Domestic Product.
