Malawi moves to consolidate EITI process gains

MWEITI Logo - High Resolution

Malawi moves to consolidate EITI process gains

By Chiku Jere

Government intends to scale up consultations with various stakeholders in the extractive sector as a way of consolidating gains attained in the Extractive Industry Transparency Initiative (EITI) process, which culminated in the launch of Malawi’s maiden EITI Report, MWEITI National Coordinator George Harawa has said.

Harawa, who is also an Assistant Director in the Ministry of Finance and Economic Development’s Revenue Policy Division, said this in Salima where MWEITI Multi-Stakeholder Group (MSG), a grouping comprising government officials, the private sector and civil society representatives charged with the implementation of the EITI process, gathered to strategize and validate a five-year EITI implementation work plan.

The function tackled MWEITI strategic plan which will see the implementers reflecting on gains and shortfalls of the first EITI implementation process and work to improve on the future process.

201711 Malawi Mining & Trade Review George Harawa MWEITI.pngIn his remarks, the coordinator hailed all those who contributed to the successful implementation of the initiative and production of the first report but stressed that it was not time for MSG members to sit on their laurels, but rather work towards perfecting the process.

There is need for us to draw lesson from challenges we met in the first process and move to rectify them. Let us up our game, improve coordination and move with speed to effectively work on all recommendations that the first report made,

said Harawa, adding, doing so will set the country on the right path towards ensuring transparency and accountability in extractive sectors.

Among crucial recommendations highlighted in the report which the MSG focused on are doing away with discrepancies and shortfalls in the current governance system as well as addressing identified oversights on revenue management.

For instance, through the report, the Independent Administrator engaged was supposed to reconcile to government payment information that was submitted by companies with government receipts submitted by MRA, Department of Mines, and Department of Forestry.

But it was discovered that there was a yawning difference of 34% between the amount government declared as having received and the amount companies reported.

So, a recommendation was put forward that there has to be an assessment to ascertain credibility of the payments and revenues through independent auditing that applies international standards.

Particularly, authorities are being urged to ensure that instructions for next EITI reporting emphasizes on mandatory compliance to internationally certified auditing process, through a proposed enactment of EITI reporting regulations.

The report also stresses on maintenance of accurate and comprehensive mineral production records and recommends the Department of Mines (DoM) to produce reliable data for the EITI process.

It advises the department to develop procedures to ensure the completeness of the minerals’ production data reported by companies and implement a computerised system to monitor, and update the data on a monthly basis.

 This is important because it will help in assessing and monitoring companies’ liabilities in terms of royalties on production, their revenue payments, as well as the development of the extractive activities in the country as a whole.

The paper says this would also improve the department’s ability to reconcile royalties and other non-tax payments with production data and investigate any discrepancies.

Weaknesses in revenue administration including non-collection of payments particularly non-tax payments such as royalties and ground rents are also highlighted in the report, and a suggestion is made to the Director for Mines to make systematic follow-ups of all amounts due from companies to ensure that all fees are collected on a timely basis.

The overall cut-across advice from the report is that the Mines Department should improve its tax administration and collection capacities to effectively discharge its duties and maximise tax collection which will lead to the attainment of maximised benefits from the country’s extractives.

Harawa could not agree more with this, saying, Malawi will only realize full potential from its natural resources sector in terms of revenue generation if a well coordinated system that monitors and ensures good governance in the extractives sector is vigilantly in place.

This system starts with proper and up-to-date implementation of the EITI process, because it is through this initiative that all information pertaining to full disclosure of all extractive sectors revenue as well as beneficial ownership will be made accessible for stakeholder tracking and monitoring,

he said.

The gathering also brainstormed and validated a Communication Strategy that will enhance public awareness of the EITI process in tandem with the Open Data Policy, as one way of improving governance in the industry.

Information on EITI International website indicates that adherence to EITI enable countries to attain a wide range of benefits such as improved tax collection and budgetary planning as well as improved governance systems which enhance citizens’ trust in government.

It also says that some governments have successfully used EITI records to prove their trustworthy and have loans from international financial lending bodies easily approved.

EITI has also been praised for improving and stabilizing investment climate through open and effective engagement between government, civil society and citizens.

Malawi’s EITI process is receiving both financial and technical support from governments of German and UK through GIZ and DfID respectively.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 55 (November 2017).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

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