Malawi’s Mining Sector Under President Chakwera: Revenue Growth Masks Deep-Seated Challenges

Revenue collections from Malawi’s mining sector have shown steady growth under President Lazarus Chakwera’s administration, with projections indicating a rise from MK453.7 million in the 2024/25 fiscal year to MK1.5 billion by 2026/27.

This upward trend, driven by the revival of key mining projects and increased gemstone exports, has been hailed by the government as evidence of progress in its efforts to transform the sector into a pillar of economic growth.

However, a closer examination reveals that this revenue growth masks deep-seated challenges, including infrastructure deficits, illegal mining, and limited local participation, raising questions about the sustainability and inclusivity of the sector’s development.

Revenue Growth: A Sign of Progress?

The increase in mining revenue is undoubtedly a positive development for Malawi, a country heavily reliant on agriculture and in dire need of economic diversification. Key drivers of this growth include:

1. Revival of the Kayelekera Uranium Mine: The recommissioning of the Kayelekera Uranium Mine by Lotus Resources Limited has been a major boost. With uranium exports expected to commence by June 2025, the project is projected to significantly contribute to government revenue and create jobs in the northern region.
2. Rare Earth Elements (REE) Projects: The Songwe Hill REE Project in Phalombe and the Kangankunde REE Project in Balaka, developed by Lancaster Exploration and Lindian Resources, respectively, are attracting substantial foreign investment. These projects position Malawi as a potential supplier of critical minerals for green technologies, further enhancing revenue prospects.
3. Gemstone Exports: Gemstone production increased by 61% in 2024, driven by rising global demand. Malawi’s diverse range of colored gemstones, including aquamarine, amethyst, and ruby, has found markets in Asia, Europe, and the USA.
4. Formalization of Artisanal and Small-Scale Mining (ASM): The government’s efforts to formalize ASM activities through cooperatives have improved revenue collection from license fees and royalties, particularly in gold and gemstone mining.

Behind the Numbers: Persistent Challenges

While the revenue growth is commendable, it obscures significant challenges that threaten to undermine the sector’s long-term potential:

1. Infrastructure Deficits: Poor road networks, unreliable power supply, and limited access to water remain major obstacles. These infrastructure gaps increase operational costs for mining companies and deter potential investors. For example, the Kayelekera Uranium Mine’s success hinges on the availability of reliable power and water, yet the region continues to face frequent outages and shortages.
2. Illegal Mining and Smuggling: Illegal mining and smuggling of minerals, particularly gold and gemstones, remain rampant. These activities not only deprive the government of much-needed revenue but also perpetuate environmental degradation and unsafe working conditions. Despite efforts to formalize ASM, many miners continue to operate outside the legal framework, selling their produce to unregistered middlemen and smugglers.
3. Limited Local Participation: While foreign investment has grown, local participation in the mining sector remains minimal. Most large-scale projects are dominated by international companies, with limited opportunities for Malawian entrepreneurs and communities. This has fueled concerns about the equitable distribution of mining benefits, with many locals feeling excluded from the sector’s growth.
4. Environmental and Social Concerns: Mining activities, particularly in ASM, have been linked to environmental damage, including deforestation, water pollution, and land degradation. The government’s enforcement of environmental regulations has been inconsistent, raising questions about its commitment to sustainable mining practices.
5. Slow Implementation of Reforms: While the legal and regulatory framework has improved, implementation has been sluggish. For instance, the Malawi Mining Investment Company is yet to become fully operational, and the rollout of the Blockchain-based Mining Monitoring Transaction System has faced delays. These delays hinder efforts to improve transparency and accountability in the sector.

The Road Ahead

For Malawi’s mining sector to truly thrive under President Chakwera’s leadership, several critical steps are needed:

1. Accelerate Infrastructure Development: The government must prioritize investments in roads, power, and water infrastructure to support mining operations.
2. Strengthen Enforcement: Robust measures are needed to combat illegal mining and smuggling, including stricter penalties and better monitoring systems.
3. Promote Local Participation: Policies should be introduced to encourage local investment and ensure that communities benefit from mining activities.
4. Enhance Environmental Protections: The government must enforce environmental regulations and promote sustainable mining practices.
5. Improve Transparency and Accountability: The timely implementation of reforms, such as the Blockchain-based monitoring system, is crucial to building investor confidence.

Conclusion

While the steady growth in mining revenue under President Lazarus Chakwera’s administration is a positive development, it is not a panacea for the sector’s deep-seated challenges. The government must address infrastructure deficits, curb illegal mining, and ensure that the benefits of mining are shared equitably.

Only then can Malawi’s mining sector truly become a driver of sustainable economic growth and a cornerstone of the Malawi 2063 vision. The coming years will be a critical test of President Chakwera’s commitment to transforming the sector and delivering on his promises of inclusive development.

 

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