The Malawi Voice reported today that Rafiq Hajat, the Executive Director of the Institute of Policy Interaction, said Malawi may well be an attractive destination for foreign companies in the extractive industries because of the laxity in the legal and regulatory framework.
This comes after Malawi was not among the 25 countries listed in the Behre Dolbear Mining Investment Index. This is an annual qualitative political risk assessment of the key players in the international mining industry. Malawi may not be on the index because it is not yet a key player and/or it scores too low, which is the case of Zimbabwe.
The index, compiled since 1999 by the Behre Dolbear Group Inc., focuses on a country’s economic system and political system, degree of social issues affecting mining, delays in receiving permits, degree of corruption, stability of currency, and competitiveness of tax policy.
The assessment is based on an internal survey of 150 professionals from companies that form the group; this year Behre Dolbear completed 220 projects in 55 countries. The Index of Economic Freedom (a Wall Street Journal/Heritage Foundation publication), the World Economic Forum’s Global Competitiveness Report, and publications from Transparency International are also used to determine the scores of countries.
Six African countries were listed (from lowest to highest ranking): the Democratic Republic of the Congo, South Africa, Zambia, Tanzania, Ghana and Botswana.
Here in Malawi Hajat commented that current regulative framework is poor
rampant corruption and centralisation of powers to approve concessions and agreements without consultation or accountability.
Nevertheless, this may not deter investors.
In fact, earlier this month, Alex Lemon, the president of Mkango Resources Limited, a company that is prospecting for rare earth elements in southern Malawi, commented that the current regulative and legislative framework is good from the perspective of investors.
He made these remarks at the launch of the Government of Malawi’s Mining Governance and Growth Support Project that is financed by the World Bank and European Union. In contrast, Lemon’s comments were followed by pleas from Malawi’s development partners to the government to improve the current framework to ensure Malawi benefits from its commodity wealth.
Hajat is well-known for his stance against the former late president Bingu wa Mutharika’s who was accused by civil society of becoming turning the country into an autocratic kleptocracy. Opposition to Mutharika came to a head during the 20th July protests in 2011 held the high cost of live. There were 19 fatalities. Hajat and the other five organisers of the protest were warned by president Mutharika that if they returned to the streets he would “smoke” them out.
Despite Mutharika’s threats, Hajat remains an active and vocal member of civil society.
For the full report on the 2012 Behre Dolbear Mining Investment Index, visit the group’s website.