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Turning extractive industry into cash cow

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By Rebecca Chimjeka, Yohane Symon & Richard Chirombo:

The word ‘potential’ is, sometimes, thrown around anyhow.

Sometimes it is thrown around to stimulate a feel-good attitude. At times, it is thrown around to stir nostalgic feelings, especially when used in relation to days when Malawians and people of other nationalities used to trek to South Africa to work in mines, thanks to bodies such as the Temporary Employment Bureau of Africa, which used to be a labour recruitment agency.

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But the word is used all the same, with the extractive industry, which include mining, oil and gas production, being one of the players that throw the word around whenever it suits it.

However, it is not only those actively involved in extracting precious stones, oil and gasses that throw the word potential anyhow; even those who monitor activities of extractive industry players sometimes join the game of carelessly throwing ‘potential’ around.

The latest is the 2015/16 Malawi Extractive Industries Transparency Initiative (Mweiti) report, which indicates that, although Malawi has ‘potential’ in its extractive industry, it is failing to realise its full potential from the industry.

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It is, in a way, the same old story; massive potential, but nothing to show for it. They call it the resource curse.

This is despite the fact that Malawi is one of the countries with a horde of mineral resources.

As observed by Mweiti, the country could, literally, be sitting on ‘gold’.

“The country is a small producer of uranium, gemstones, coal and construction materials, although the government is promoting investment in the extractive industries to reach 20 percent of GDP [gross domestic product] in 2020.

“Some have expressed concerns about the sector’s environmental impact, distribution of benefits and license awards, particularly related to the oil exploration around Lake Malawi,” it says.

The only drawback could be that there is, presently, no petroleum production in Malawi.

Despite activity in the extractive industry being at a relatively small scale, organisations that matter seem to take pleasure in hiding information.

No wonder, the Mweiti report shows that the sector is plagued by challenges such as lack of transparency in mining contracts, lack of accurate export data and inaccurate statistics by the National statistical Office (NSO) and Department of Mines (DoM).

According to the report, cases of illegal mining are on the rise in the country, with the government choosing the easy way out— namely, maintaining a hush that is so discomforting to ordinary Malawians that, on October 10 this year, concerned people in Mangochi District demonstrated against policymakers’ inactivity on the issue.

The demonstrators petitioned President Peter Mutharika, through

Mangochi District Commissioner Moses Chimphepo, asking him to act on illegal mining activities taking place in Makanjira and the government-owned Namizimu Forest in the district.

Mouthpiece of the demonstrators, who is also Mangochi Civil Society Network Vice Chairperson, Dickens Mahwayo, says they want sanity to prevail in the sector.

“It is not that people of Makanjira and Namavi are against mining activities. All they want is that procedures should be followed. We want only licensed companies to come and work in the area so that people can be benefitting from natural resources,” Mahwayo says.

The bone of contention is that, since February 2016, some people have been extracting mineral resources without authorisation, in the process clearing land once covered by trees and reducing natural cover to the bare minimum.

This, says Mahwayo, puts not only trees and extractive resources at the mercy of natural devices; it puts lives of future generations on the knife because “rainfall patterns may be affected, soil erosion may become the order of the day” and life may, on the whole, be unbearable.

Natural Resources Justice Network Chairperson, Kossam Munthali, says time to act is now, further warning that failure to do so may set a bad precedent.

So far, the government has acted, after Mutharika, as Commander-in- Chief of the Malawi Defence Force (MDF), ordered that solders be deployed to the affected areas.

By October 20 this year, MDF had apprehended 118 people, according to Mangochi Police Station spokesperson, Roderick Maida.

Some of those netted are foreign nationals, notably from Mozambique, Tanzania and the Democratic Republic of Congo.

This came after Mangochi District Forestry Officer, Leonard Kamangadanzi, visited affected areas to assess the extent of damage within Namizimu Forest.

Funny enough, the government and stakeholders are only protecting ‘potential’; for it is not clear whether minerals such as gold, which Mangochi communities suspect are being extracted, are there.

Moving on

Perhaps it is time stakeholders took measures to protect natural resources while everyone is talking about the industry’s ‘potential’. It will save Malawi the trouble of sealing loopholes while Lilongwe burns in the fire of lawlessness.

To do that, according to Mweiti, relevant laws have to be updated through amendments. This also means changing policies.

There is also need to look into the issue of sharing-agreements so that Malawi can get its fair share from minerals in its waters and under its soils.

That way, Malawians will be sensitised to the contribution of the industry to GDP.

As things stand, while Malawi has a lot of foreign companies that are into mining, there is no accurate information from the DoM and Malawi Revenue Authority (MRA). This means there is no way of knowing how much the country is realising after analysing revenue collection from mining activities.

The report also notes that NSO has no accurate data on mining activities taking place in the country.

“In order to ensure that statistics published are accurate and reliable, it is recommended [that we must] ensure that relevant national surveys are conducted regularly; for instance, national labour force surveys to be conducted every five years at a minimum NSO may need to consult both DoM and MRA about exports data in order to conduct reliable analysis and to provide accurate data with their approvals,” the report reads in part.

The report also says, in order to improve levels of transparency and make it an integral feature of governance and management systems, the government should develop a work-plan for mainstreaming and the creation of open data for Extractive Industries Transparency Initiative into government systems.

It also recommends that DoM should develop procedures to ensure the completeness of export data reported by mining companies and implement a computerised system to monitor and update the data. This may include obtaining MRA’s data on exports on a monthly basis in order to update DoM’s cadastral system.

“MRA may need to upgrade its system in order to allow systematic updates to exports data by sector. Such system shall allow the allocation of each product exported to the relevant sector through a codification system of exported items,” the report says.

Of course, the buck stops at the government.

Chief Director in the Ministry of Natural Resources, Energy and Mining, Bright Kumwembe, says the government is committed to implementing recommendations of the report.

Fortunately, international partners are willing to put their hands to the wheel, too.

For instance, Deputy Head of Mission at the Embassy of the Federal Republic of Germany, Thomas Staiger, says his government, through GIZ, will continue to support the Malawi extractive sector in a bid to promote transparency and accountability.

But, according to Munthali, accountability can only be guaranteed once stakeholders fill the gap between recommendations contained in reports and implementation of reforms in the sector.

Otherwise, Malawi’s silent crisis of mineral exploitation without licences may become so loud that confusion may reign all over the place. It is a state no one desires.

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