19 October 2018

Malawi Govt Gets K5.6 Billion From Mining Sector - Activist Calls for Enactment of New Minerals Bill

The Malawi government received over K5.3 billion from the mining sector in the 2015/2016 financial year, says the Malawi Extractive Industries Transparency Initiative (MWEITI) report for the year in question launched on Wednesday night in Lilongwe.

It was revealed during the launch that Raiply Malawi Limited, the company which processes timber products in Viphya Plantation, paid most of this tax.

This is the second MWEITI report since Malawi began subscribing to Extractive Industries Transparency Initiative (EITI) standards.

EITI standards, among other things, demand that companies in the extractive industry publish their operational and financial reports and that governments must be transparent in extractives dealings.

Most mining captains hailed the 2015/2016 MWEITI report, saying it projects a bright future for Malawi's extractive sector.

"We are on the right track towards achieving EITI standards," said George Harawa, MWEITI National Coordinator. "Most communities are now aware of what is going on in the mining sites around their areas."

But Natural Resources Justice Network chairperson Cossam Munthali said Malawi must quickly enact the new Mines and Minerals Bill if EITI standards are to be truly met.

"We are going nowhere if we are still nursing an old mines and minerals law which promotes secrecy, a breeding ground for conspiracy and corruption for unscrupulous investors to rob Malawians of their God given resources," noted Munthali.

But Chamber of Mines Coordinator Grain Malunga said Malawians need to avoid what he described as "use of inflammatory language" against mining investors, saying EITI standards clearly stipulate the roles of every stakeholder to attain the much needed change in the extractive industry.

Chief Director in the Ministry of Natural Resources, Energy and Mining Bright Kumwembe took note of Munthali's concerns, promising that government will present the new Mines and Minerals Bill before Parliament during the November sitting.

MWEITI Report says in order to improve the EITI process in Malawi, additional measures should be effected and these should include mainstreaming EITI disclosure.

"In accordance with EITI 4.9.c, "where the assessment in 4.9(a) concludes that there is (i) routine disclosure of the data required by the EITI Standard in requisite detail, and (ii) that the financial data is subject to credible, independent audit, applying international standards, the multi-stakeholder group may seek Board approval to mainstream EITI implementation in accordance with the 'Agreed upon procedure for mainstreamed disclosures.

"The government currently produces an Annual Economic Report (AER) for each calendar year systematically. The AER covers the main sectors generating wealth to the country's economy and summarises data on the major changes in these sectors, the main projects, data on production, exports and contribution to the economy.

"However, data presented on the AER are not subject to credible, independent audits, applying international standards. As a result, data included in the AER may present material mistakes due the lack of thorough review and assurance process."

The report has noted that AER does not include information about receipts and revenues collected by government entities involved in the extractive industry in the country such as collections of MRA, DoM and DoF.

The report has commended the Department of Mines for using a cadastral system which is publicly accesible online. However, the report says the contextual information on the extractive industry, data on revenues collected and budget allocation as required by the EITI standard, are not yet subject to electronic publication in the form of interactive open data.

In order to improve transparency in Malawi and make it an integral feature of the country's governance and management systems, the report has recommended development of a work plan for mainstreaming and the creation of open data for EITI into government systems.

On capacity building and raising awareness of government officials on mainstreaming open data concept, the report says government should develop procedures manually and put processes in place to ensure timeliness, quality of data, reuse and cost effectiveness of the systems.

EITI requires publishing comprehensive reports, including full disclosure of government revenues from the extractive industries, as well as the disclosure of all material payments made to the government by companies operating in the oil, gas and mining sectors.

The objective of this EITI report is to strengthen the understanding of the level of contributions of the Extractive sector to the economic and social development of Malawi in order to improve transparency and good governance in all components of the extractive industry value chain.

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