Malawi loses $100mn a year to gold smuggling, state miner says

Malawi is losing about $100mn a year to gold smuggling, according to the state-backed Malawi Mining Investment Company (Mamico), which is setting up trading centres to buy the metal directly from small-scale miners.

Leonard Kalindekafe, Mamico’s chief executive, said the leakage undermines the economy and deprives Malawians of their wealth. He spoke to journalists during a tour of a gold trading centre in Lilongwe.

“We have decided to establish these centres to buy gold direct from artisanal miners instead of being sold to unknown buyers,” he said.

Mr Kalindekafe said gold could be a “game changer” for Malawi, which is short of the foreign exchange it needs to import fuel and other essentials.

He said gold alone could fetch twice what the country earns from tobacco, its main export. Small-scale miners work about 100 sites across the country, he said.

To start buying, Mamico needs K85bn for the first three months and K300bn a year, he said. It has partnered with FDH Bank and NBS Bank.

All the gold bought will go to the Reserve Bank of Malawi (RBM), and Mamico is waiting for the central bank to agree an offtake deal.

Thoko Tembo, mining minister, said miners sell to smugglers because they have no market. The government would provide one, he said, and would also supply finance alongside the commercial banks.

He said he was optimistic buying would start soon.

Three centres have been set up so far, in Lilongwe, Kasungu and Nkhotakota.