The editorial “New law must promote investment” featured below was initially published in Malawi’s Mining Review Issue Number 26 2015 that is circulating this June 2015.
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
New law must promote investment
By Editor Marcel Chimwala
It is a welcome development that the Government has formulated a New Mines and Minerals Bill, which will possibly be tabled in parliament and assented into law by the end of this year.
Having attended the workshop to scrutinise the bill and followed the serious debate that characterised the event held at Capital Hotel in Lilongwe a month ago, we have the impression that Malawians are really serious to come up with a law that will not retard but propel growth of the mining sector for the benefit of the nation.
Among other issues, some delegates insisted that the new law should ensure that mining companies execute their corporate social responsibility obligations.
They also pushed for the new law to ensure that the Government and Malawian citizens have a big chunk of shares in mining ventures as opposed to the new bill which stipulates a free equity ownership interest of up to 10% for the Government.
On the push for more corporate social responsibility gains for Malawians, we agree with the delegates who emphasized on the need for issues of corporate social responsibility to be clearly stipulated in the new law understanding how community involvement is necessary in the development of any mining project.
However, we at Mining Review believe that as a nation we have to be cautious in pushing companies to implement corporate social responsibility projects. We agree with views raised by private sector representatives at the forum that pushing exploration and mining companies to prioritize corporate social responsibility projects at the expense of their core activities will make Malawi an uncompetitive investment destination.
It has to be understood that for mining to take place, there has to be exploration which is a very risky business as the exploration firm can either find a sizeable and quality quantity of the resource that can propel it to raise finance to develop the resource or not. So why do we push a mere holder of a tenement to invest funds in corporate social responsibility when we are not sure whether the explorer will make a relevant discovery and pursue the project further or not?
We also find illogical the suggestions that the new law should provide for more free equity to the government and locals in mining ventures. As the Commissioner for Mines, Mr. Charles Kaphwiyo, said at the workshop, giving more shares to the government and locals will expose Malawi to the big risks that exist in mining ventures as mining is a capital intensive and risky business.
We believe the best way for Malawi is to open up to investors who are ready to bring money in the country and employ more Malawians in so doing helping to eradicate poverty.
Malawi will lag behind in attracting investors if it puts in place several retrogressive conditions that may threaten investors, and we have to bear in mind that currently all the countries are competing for the same investment.
We, therefore, support the route taken by the formulators of the new bill by not providing for more shares to government in mining projects as such a scenario cannot benefit the country.
All in all, we support the assertions made by the Minister of Natural Resources, Energy and Mining Honourable Bright Msaka SC that Malawi needs a modern Mines and Minerals Law that adequately addresses corporate social responsibility, has in place a system for determining fair practices, enforces transparent and accountable decision making, encourages local equity participation, protects investors from being hounded out of their investments, and does not ignore the role of women and the youth.