FDH Bank partners with Government of Malawi to support Artisanal and Small-Scale mining sector

22,000 Malawians are involved in artisanal and small-scale mining (ASM). To address the challenges faced by artisanal miners, the Ministry of Mining has agreed to partner with the Malawian FDH Bank.

The Memorandum of Understanding, signed in March 2014, outlines that FDH Bank will provide access to capital and financial education to small-scale miners. Minister of Mining John Bande explained that this sector has been neglected and therefore “is failing to grow and contribute meaningfully to development”.

Philip Madinga, Managing Director of FDH Bank, stated that FDH is the first bank to support ASM in Malawi

Our heritage as a local bank enables us to understand the development needs of most Malawians. Our growth, again, as a bank is heavily attributed to the small-scale enterprise.

This public-private partnership can be seen in light of Malawi’s Mines and Minerals Policy (2013) that was launched just last year. According to the policy, ASM operations in Malawi are informal and unsustainable in nature with little collaboration with larger private mining companies. Many small-scale miners lack training, capital and appropriate technology which results in low mine productivity, environmental degradation, and poor occupational health and safety outcomes.

Malawi has a number of precious and semi-precious stones (including aquamarine that is sold by Silver Hills Gems in South Africa; read this letter that explains how the gemstones are mined and taken to South Africa for processing and retail). A large number of small-scale miners are involved in gemstone mining. In a few months, after the national airborne geophysical survey is complete, Malawi’s mineral potential will be known, which is expected to draw more investors.

A recent report indicates that Malawi is losing out of “billions” because of the smuggling of precious and semi-precious stones. The Malawi Miners Task Force, comprising of Gemstone Association of Malawi (GAM), Malawi Women in Mining Association (MWMA), Blantyre Mining Association Limited (BMAL) and Chichiri Mining Cooperation Society Limited, claim that the corrupt practices of Nyala Mines and Minex Ltd at operations in the Chimwadzulu Hills, Ntcheu, have cost Malawi.

In response to the issues in the ASM sector, the Government outlines in the policy that it will:

• a) Government will formalise and regulate the ASM sub sector;
• (b) Government will identify and provide training in appropriate technology, environmental management and occupational health and safety standards to the ASM subsector;
• (c) Government will assist those with viable projects to access loans from lending institutions;
• (d) Government will provide extension services and training for value addition in precious and semi precious stones; and
• (e) Government will establish a robust monitoring mechanism to curb smuggling of precious and semi precious stones.

The Mines and Minerals Act, dating back to the 1980s, must be revised and passed to enable the civil service to put the policy into practice. This should be high on the agenda for the mining sector after the national elections are held and results are announced next month.

For further information on ASM in Malawi, take a look at Paul Kamlongera’s research on poverty alleviation and artisanal mining (both are gated articles):

• Making the poor ‘poorer’ or alleviating poverty? Artisanal mining livelihoods in rural Malawi. Paul Justice Kamlongera. (2011) Journal of International Development 23(8): 1128-1139.
• Poverty alleviation in rural Malawi: Is there a role for artisanal mining? Paul Justice Kamlongera & Gavin Hilson. (2011). Journal of East African Studies 5(1): 42-69.