Ministry of Finance, Economic Planning and Development
PRESS RELEASE: MALAWI DESIGNATED AS EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE (EITI) CANDIDATE COUNTRY
The Government of Malawi through Ministry of Finance, Economic Planning and Development and the Malawi Extractive Industries Transparency Initiative (MWEITI) Multi-stakeholder Group (MSG) are pleased to inform all Stakeholders, Development Partners and the General Public that the EITI Board, during its meeting on 22nd October 2015 in Berne, Switzerland, designated Malawi as an EITI candidate country based on the application made by Malawi in late July 2015.
The EITI Board through its congratulatory letter to His Excellency the State President Prof. Arthur Peter Mutharika has commended the government and stakeholders for the sustained commitment in support of the process leading up to the candidature application. The Board expresses hope that the EITI process in Malawi can fulfil its potential as a tool to improve the management of natural resources, strengthen government systems, increase high quality investment, improve accountability, and help to ensure that Malawi’s natural resource wealth benefits all its citizens.
The decision of the EITI Board reads as follows:
“The EITI Board admits Malawi as an EITI candidate country on 22 October 2015. In accordance with the EITI Standard, Malawi is required to publish its first EITI Report within 18 months of becoming a candidate, i.e. by 22 April 2017. Malawi is required to publish an annual activity report for 2015 by 1 July 2016. Validation will commence within 2.5 years of becoming a candidate (by 22 April 2018)”.
Brief background to the EITI process in Malawi.
Advocacy for Malawi to join the EITI began in 2008 in Malawi and there have been many activities since. At some point, the process seemed to drag. However, as soon as the current administration took office, in June 2014, a public commitment was made to join the EITI). His Excellency, President Arthur Peter Mutharika announced during his inaugural state of the nation address in June 2014 that Malawi would sign up to the EITI.
The decision came as it was believed that EITI will improve the management of the country’s natural resource wealth, including minerals, oil and gas and forests. These may not all be included at the beginning of the EITI process, but it is the MSG’s aim to see all natural resources included in the near future in order to enhance the outcomes of exploiting these resources for Malawians both present and future generations.
What is EITI and what will it achieve in Malawi?
EITI is a global transparency standard that was launched over a decade ago following a civil society movement to promote open and accountable management of natural resources. It seeks to strengthen government and company systems, inform public debate, and enhance trust. In return, Malawi natural resources sector is expected to develop and flourish in addition to enhancing transparency and accountability in use of public resources.
What are the EITI Candidature Criteria?
Before a country can be accepted as an EITI candidate, it is required to fulfil certain requirements, including making a public declaration to join the EITI, appointing an EITI Champion, establishing a MSG, and development a costed workplan to be managed by the MSG. Malawi complied with all four sign-up criteria: the Minister of Finance, Economic Planning and Development was appointed as the Malawi EITI (MWEITI) champion, and an independent EITI Multi-Stakeholder Group was established and announced to the general public through the media. An interim EITI National Secretariat housed in the Revenue Policy Division of the Ministry of Finance, Economic Planning and Development was also established.
Who drives the MWEITI?
The Multi-Stakeholder Group (MSG) is responsible for overseeing the implementation of the EITI, which is supported by EITI National Secretariat. This was established towards the end of last year (2014) when the Government, private sector and civil society selected the institutions, companies and organisations to be represented on this group.
What is next or the way forward?
In order for Malawi to implement the EITI Standard and to become compliant with the initiative, Government will be required to disclose information on tax payments, royalties, fees and charges, rent, licences, contracts, and production, among other key elements around resource extraction. Natural resources companies will also be required to disclose the payments they make to the Government on the same. This information will be disclosed in an annual EITI report, of which the first one is due within 18 months from the date of acceptance as a candidate country. Malawi must work hard to produce the first report successfully and pass the validation test to become a compliant country. Malawi’s MSG has also committed to working for contract transparency in the extractives as well as complying with requirements to make beneficial owners of companies known.
The MSG through support from GIZ has instituted a scoping study which is underway, facilitated by the MWEITI Secretariat, and being led by independent consultants. The study is intended to assess and determine which natural resources and which companies should be included in the first EITI report. It is also intended to establish the materiality threshold and track and pre-test revenue flows into MG account number 1 and documentation.
These EITI reports will be a useful tool for all Malawians to see how the country’s natural resources are being managed, and how much revenue is being generated. We hope this information will stimulate informed and evidence-based dialogue on ways of how best to utilize our finite and non-renewable natural resources to meet our national priorities, outlined in the Malawi Growth and Development Strategy II. It is therefore a great honour for all of us as Malawians for our country to have received approval to join the EITI as a candidate country as we now join 48 other countries, which are already part of the EITI, including all our neighbours, as well as the USA, UK and Germany.
Word of Appreciation
We would like to recognize and commend all the stakeholders. Accordingly, we are appreciative of the technical work of the former EITI National Task Force, the EITI Multi-Stakeholder Group, and the EITI Secretariat throughout the process. We are also appreciative of our Development Partners, who have played a crucial role in funding EITI-related activities in the country. Special recognition goes to GIZ, the Norwegian Embassy and the World Bank for their financial and technical support throughout. We believe that this working relationship will continue and that other Development Partners will also consider joining in the process of the EITI implementation.
We are also appreciative of the continued support we received and continue to receive from the International EITI Secretariat in Oslo, Norway. They have made life easy for us up to this point, and they share this joy with us.
Finally, we would like to inform Development Partners and all stakeholders that the Multi-Stakeholder Group and the interim National Secretariat have developed a work plan for the next three years to move Malawi from a candidate country to a compliant one. The real work of implementing this plan to make the EITI a reality in Malawi starts now. We are therefore relying on the continued commitment and diligence of the MSG group and all other stakeholders involved and/or interested in the prudent management of natural resources in Malawi. We will hold an official launch for Malawi EITI, or MWEITI as the initiative will be known in Malawi, early next year, 2016.
Let us remember that after the celebration as a newly accepted candidate nation, there is work ahead of us. And as we have been doing, we will continue to work as a team and with diligence to ensure that the country benefits from joining the EITI.
Mr. Crispin C. Kulemeka
REVENUE POLICY DIVISION,
MINISTRY OF FINANCE, ECONOMIC PLANNING AND DEVELOPMENT