UN rubbishes Malawi’s Paladin uranium deal, fertilizer subsidy

United Nations Special Raportuer on the Right to Food Olivier De Schutter who was in Malawi for an assessment of the food situation in the country has rubbished Kayerekera uranium mine deal between Malawi and Australian Paladin Mining Company saying the Southern African country has had a raw deal that is robbing the poor.

The UN Raportuer said the uranium mining deal was one of the investments in Malawi through which the country is losing resources that could otherwise make a difference in food security and other pro-poor initiatives. He said in the life span of the mine Malawi is expected to lose almost US$281 million.

The Special Raportuer also rubbished the country’s food security policies saying even the high-profile Farm Input Subsidy Programme (Fisp) has failed to rid the country of chronic food security and malnutrition.

“Mining companies are exempt from customs duty, excise duty, value added taxes on mining machinery, plant and equipment. They can also sign special deals on the rate of royalty owed to the government. I believe that there are more reasons that investors would come to Malawi without such incentives,” he said.

UN official Oliver De Schutter says Malawi losing out on Kayelekera deal
UN official Oliver De Schutter says Malawi losing out on Kayelekera deal

De Schutter was addressing journalists in the capital Lilongwe at the end of his 11-day tour of the country.

He bemoaned that due to illicit financial flows, tax envasion as well as tax incentives that the country offer to both domestic and foreign companies currently Malawi was failing to get maximum use of its resources.

De Schutter said that revenue losses from special tax incentives to Paladin Africa Mining alone are estimated at almost K67 billion (US$205 milion) since the mine started its operations and could reach almost K92 billion (US$281 million) over its13-year lifespan.

“Paladin alone is costing the budget more than US$20 million (almost K8 billion) a year in taxes,” he said.

He added: “I am convinced that unless combined with a comprehensive enhancement and optimisation of tax revenue, current macro-economic reforms may not have substantive positive impacts. There is need for
Malawi to examine its national tax laws and policies towards preventing illicit capital flight. As mining develops, Malawi can simply not afford business-as-usual.”

The UN Special Raportuer said it is estimated that the country has lost over 10 percent of its growth domestic product (GDP) to illicit outflows and tax evasion over the period 1980 to 2009.


On Fisp, he bemoaned that despite such high-profile food security policies, more than half of the country’s population remains in poverty with almost quarter of the population still utra-poor earning less than the recommended UN daily wage.

De Schutter said Fisp has actually failed to uplift the lives of poor Malawians despite huge sums of money going into the programme every year.

“One of the major concerns is that targetting may not be optimal as it is only those who are already better off or better connected that have access,” he said.

He blamed the Fisp for the problems that dog the country’s budget, saying the current cost of the subsidy is straining other services such as agricultural research, extention services, training, rural roads as well as delays in the implementation of the Green Belt Initiative (GBI).

De Schutter expressed doubts that Malawi will sustain the programme considering the rising costs of fertiliser imports.

He also said it is time Malawi should move beyond the fertiliser-led green revolution and embrace ‘brown’ and ‘blue’ revolutions to rebuild soil fertility and water retention.

De Schutter also specifically expressed concerns on the country’s current minimum wage currently at K371 ($1.12) per day, describing it as the lowest in the world.

He also expressed worries over the tenancy system in the tobacco industry which he said is also driving poverty and hunger in the country .

“Malawians need a durable agricultural resource base and living wages and currently they are getting neither. The policy of providing abundant, cheap and non-unioninsed labour to plantation owners must be consigned to the past,” said De Schutter.


Commenting on the assessment by the UN official, Billy Mayaya who is chairman of the National Right to Food Network told Nyasa Times that the UN Special Rappoerteur visit to Malawi has highlighted the key issues that reinforce food insecurity.

“We commend government efforts to remedy the situation with various initiatives such as FISP. At the same time we appeal to government that there is need to put in measures to curb corruption as well as streamline targeting of the ultra poor and focus on sustainability,” Mayaya said.

“We are hopeful that the Government of Malawi will seriously consider the findings and recommendations of the UN Special Rapporteur. The key is for Parliament to support the Bill on the Right to Food which is central to realising the Progressive Realisation of the Right to Food in Malawi with a focus on putting in place mechanisms to curb violations of the Right to Food which impede food security,” he added.

The UN special rapporteur said he will give a report and his recommendations to both the UN Human Rights Commission and the Malawi Government.

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