Mining in Malawi’s Economic Recovery Plan

“When I took over the office of President of the Republic of Malawi, on April 7th, 2012 the country was facing serious challenges such as shortage of foreign reserves, scarcity of fuel and essential drugs in hospitals. […] To forestall these problems, my Government formulated and is implementing an Economic Recovery Plan to ensure that our country returns on track to prosperity.” 

(Joyce Banda, President of Malawi in the Government of Malawi’s Economic Recovery Plan)

Mining, along with commercial agriculture, tourism, energy and information and communication technologies, is prioritised as a sector for  “quick wins” in the Economic Recovery Plan (ERP) that was revealed and accepted by the cabinet two months ago. The ERP sets out short-, medium- and long-term goals for economic growth, and mining is herein positioned to increase foreign exchange earnings and lead to employment creation in the short to medium term.

In the ERP, key areas for the mining sector are highlighted; “to derive maximum potential of the mining industry, Government [the Ministry of Energy and Mining is the lead institution] will aim at increasing production and value addition of mineral resources”:

  • Establish legal and institutional framework
  • Update the geological information system;
  • Undertake a crash programme to train mining engineers, legal experts in mining and other related fields in the sector;
  • Enhance oil exploration and capacity building initiatives in the sub-sectors;
  • Ensure transparency in all mining contracts and close monitoring; and
  • Promote participation of local and foreign investors in the mining industry

From these, the prioritised projects in the sector are: 1) Mining Governance and Growth Support, 2) Remapping the Geology of Malawi, and 3) Support for Small Scale Mineral Production. No further details are given.

Growth in this sector, according to the ERP, has slowed due to “inadequate availability of electricity” and last week reports showed that there is a growing demand for the Electricity Supply Corporation of Malawi (ESCOM) to connect current and upcoming mines to the national grid. For example, Paladin Kayelekera has been using diesel generators since 2007 (1.5 million litres of diesel per month) to power the plant because of ESCOM’s inability to provide reliable services. The company wants to connect to the national electricity grid in September 2013. Thus the ERP, through upgrading and expanding the energy sector with the support of the Chinese Government and the US-based Millennium Challenge Corporation, is posited to improve the mining sector.

So far, there has been no in-depth analysis of the ERP from the perspective of the extractive industries although the Minister of Energy and Mining has paid lip-service to the Plan when discussing the large deposits of Rare Earth Elements found in Malawi last month. The same may be true for the other highlighted areas because the Plan is not detailed, although it draws on the more elaborate Malawi Growth and Development Strategy II 2011-2016, which will be discussed in another post.

Most commentary generated around the Plan has criticised the ERP for being vague, although the Plan has been applauded as the first step in economic recovery. For example, Henry Kachaje of Business Consult Africa was quoted by The Nation as lamenting that “It generally lacks clarity, it is not focused and it does not say who is going to champion the implementation process. It does mention the Office of the President and Cabinet (OPC), but who exactly is OPC? Is it the President, ministers? […] Apart from that, the private sector is not specifically mentioned as a player in the plan when the private sector is supposed to be a big player in a country’s economic growth. […] The ERP needs to go a bit further than just stating what they want to do.”

To date, one of the most notable moves made by the OPC has been to cut the salaries of the President and Vice-President by 30%, which, along with the ERP, have been lauded as only symbolic. As implementation of the ERP is underway, Mining in Malawi will explore the impact it has on the extractive industries because in the words of the Deputy Minister of  Economic Planning and Development, Khwauli Msiska, ” We can have the best plan possible, but the challenge is to ensure that the plan is implemented”.

The ERP is available online from the Government of Malawi.

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