World Bank tips Malawi, others on minerals
A latest World Bank report has tipped Malawi and other countries in Sub-Saharan Africa to better leverage their resources to finance their public programmes, diversify their economy, and expand energy access.
The report, Africa’s Resource Future, was launched in Washington on Wednesday.
The report comes at a time when President Lazarus Chakwera and the Tonse Alliance Administration are putting much emphasis on mining alongside agriculture and tourism as drivers of economic growth.
In recent times, Malawi has discovered the biggest deposit of rutile. In addition, the country has significant deposits of rare earth elements, uranium and other minerals.
Among others, the report finds that on average, countries capture only about 40 percent of the revenue they could potentially collect from natural resources.
“In other words, at a time when countries are burdened by slow growth and high debt, governments could more than double revenues from natural resources such as minerals, oil, and gas by adopting a better set of policies, implementing reforms, and investing in better fiscal administration and promoting good governance.
“Full taxation of natural resources is also important to charge the full cost of environmental and social impacts not always fully covered by producers, including petroleum resources. Failing to do so can act as an implicit production subsidy and raise carbon emissions,” the bank said on Wednesday.
World Bank Africa Region Senior Economist and co-editor of the report, James Cust, said maximising government revenues in the form of royalties and taxes paid by private natural resource industries, alongside attracting new investment, would offer a double dividend for people and planet by increasing fiscal space and removing implicit production subsidies.
Africa’s Resource Future provides policy makers with practical recommendations for turning a “resource curse” into a resource opportunity.
According to the report, besides capturing the full value of resource rents while continuing to attract private sector investment, governments should prepare for the next boom and bust cycle by investing resource rents into productive capital – by investing in people’s health and education and infrastructure that can support more diverse and resilient economies.
During the last sitting of Parliament, lawmakers passed the Mines and Minerals Bill which seeks to repeal the mines and minerals Act (No. 8 of 2019, Laws of Malawi) which was enacted in 2019, and replace it with a new Act that incorporates provisions for the establishment of an independent regulatory authority of the mining and mineral resources.
The regulatory authority will be responsible for regulating mineral resources and mining activities in the country including but not limited to granting of mining licences; inspection of mining activities; and advising the minister on policy matters of the mining sector.
Among others, the bill provides for mineral tenements and artisanal mining permits and the general obligations of the mineral tenement holders, it further provides for non-exclusive prospecting licences which are valid for one year and are granted by the Authority to Malawians only or companies owned by Malawians only.
The bill also provides for reconnaissance licences which give the holder the right to carry out subsurface reconnaissance activity including airborne and remote sensing.
But Natural Resources Justice Network Chairperson Cossam Munthali faulted the government for what he called bulldozing the bill and said the civil society suspected that there were other forces behind the bill.
Among others, Munthali said there had been no consultations with key stakeholders which is a departure from the practice which was there during the current law.
