Malawi’s quest for greater transparency and accountability in its promising mining, gas and oil sectors took a huge leap forward two weeks ago when the country’s first ever country report under the Extractive Industries Transparency Initiative (EITI) was officially launched raising hopes among civil society, development partners and investors.
After years of preparations and negotiations, the final text of the report—a rigorous audit conducted by top notch auditors funded by the UK and Germany—made some interesting reading for observers with media reaction following immediately on major highlights that included reports of unreconciled documentation and challenges of accuracy of data.
But these are bold initial steps taken to ensure greater transparency—an intent signalled by Malawi’s President Prof. Arthur Peter Mutharika, who since his election in 2014 has signalled serious intent to transform Malawi at the back of far-reaching socio-economic reforms.
The mining sector—just as the rest of the public sector—has not been spared the Government’s grasp amid oil and gas prospects, and more discoveries of precious stones and minerals and Government has also been keen to ensure that those opportunities are not lost.
Corruption robs a country millions of hard earned resources and this has seen the so-called “mineral resource curse” ravaging many developing countries. In this regard Malawi’s President, a former US-based international law expert has been keen to ensure that his country doesn’t fall in the same path.
Speaking during the ceremony marking the official launch of Malawi’s EITI report, newly-appointed Natural Resources, Energy and Mining Minister Aggrey Masi nodded to the Government’s aspiration for a better legal and policy framework to govern its mining sector.
He said apart from the EITI reporting initiative, the country will also soon review the laws governing the mining and petroleum sectors.
Dean Lungu, Chairperson of Malawi Chamber of Mines and Energy, a grouping of mining companies operating in the Malawi extractive sector, said the Initiative will also help to clear a lot of misconceptions about the local mining industry.
Lungu says there are many “myths and so many misconceptions” surrounding the mining sector but observed that it was lack of a clear mechanism for transparency and accountability that has led to the breakdown of trust between dissatisfied mining communities and private mining entities.
“Transparency is key to understanding a misunderstood industry particularly when we are coming from a background where the extractive sector was perceived as not to be transparent and accountable.
Likewise, the challenges that this sector was facing were also not known. Consequently, the contribution of the sector to economic growth and betterment of welfare of the people of Malawi would not be seen,” said Lungu.
Joining the EITI process was one of Mutharika’s first acts as President and Government remains supportive of the Initiative.
“The President made a commitment during his acceptance speech after the 2014 elections that he will make sure that, we, as a country join the EITI treaty. Not long ago; Malawi was approved as a member of EITI,” recalls Kossam Muthali, Chairperson of a grouping of various civil society organisations working in the extractive industry, the Natural Resource Justice Network (NRJN).
Munthali concedes that even the civil society is elated by the progress saying the first ever MWEITI report, launched at the Bingu International Convention Centre (BICC) in the capital, Lilongwe, was an enormous moment for the fledgling democracy.
“This is a historic moment to our democratisation process as a country; and an important event as we are also celebrating 53 Years of Independence. We must all agree that this marks the launch of a new era, a new chapter and a new beginning in the history of the extractive industry in this country,” adds Munthali.
The development partners, too, are impressed that the rhetoric is being backed on the ground with action and are hopeful that the country’s commitment to transparency and accountability will remain unwavering. But there are challenges ahead, majority of which are highlighted in the report itself which need to be addressed.
Rachel Etter-Phoya, a former civil society representative on the Multi-Stakeholder Group (MSG) which acts as board of the Malawi Extractive Industry Transparency Initiative (MWEITI), writing in her personal blog, ‘Mining in Malawi’ raised a number of grey areas which need to be addressed.
Additionally, some resources were not reconciled in the 2014/2015 financial year from revenue generated through the Department of Mining and Malawi Revenue Authority (MRA) and companies were reportedly shy to cooperate with auditors for the reporting before the majority of them appreciated the process, among other challenges.
There have also been questions regarding the long term sustainability of the project if donor fatigue catches up with the initiative as currently experienced by other public initiatives dependent on foreign aid.
Munthali, while citing gains such as the public release of major extractive industry contracts for Paladin, Nyala Mines, RAK Gas and Pacific Oil, said there is need for a more proactive approach to transparency by government and investors, including the quick passing of the soon to be tabled new Mining and Minerals Bill.
“We want to call on the Government to make transparent the process around the renegotiation of addendum to the oil and gas agreements and to allow corruption investigations to be concluded. We also would like the Government to make public its position on oil and gas exploration in and around Malawi’s World Heritage Site Lake Malawi National Park,” explains Munthali.
For the technical challenges, Lungu says the answer to the challenges is for stakeholders, particularly Government, to “religiously implement recommendations of this first EITI Report.”