World Bank to support Malawi’s emerging mining sector

The World Bank Board of Directors has approved a $25million credit to support the Malawi Government improve management and governance of its nascent mining sector. The funds will be provided through the Mining Governance and Growth Support Project.

The opening of the Kayelekera Uranium Mine in northern Malawi in 2009 signaled growing interest in Malawi’s minerals which include deposits of heavy mineral sands, bauxite, rare earths, nickel, niobium, , gemstones and coal. Planned investments by mining companies underpin the country’s long term goal of increasing the contribution of mining to GDP from less than two percent to at least 10 percent annually. With such rapid growth taking place, the Bank’s project aims to help the Government improve the efficiency, transparency and sustainability of mining sector governance.

“In the next few years, minerals would become one of Malawi’s main sources of foreign direct investment and generate up to 25% of export earnings, hence the need for efficiency and transparency in this sector,” said Sandra Bloemenkamp, World Bank Country Manager for Malawi. “Transparency and other good governance measures are the foundation of the new policy that the sector ministry has been formulating which should soon be endorsed by the Government. The World Bank is excited to be able to support implementation of the policy,” said Ms. Bloemenkamp.

The project will support the Government build a sustainable framework for managing mineral rights and operations which respects environmental and social management best practices. It will also support the development of transparent arrangements for optimal generation and use of mineral revenues. “Consultations on the project showed that stakeholders are interested in ensuring that tangible benefits flow from mining, and this includes being confident that government institutions have capacity to collect the royalties and taxes that are owed and make wise use of them. So the project will help build such capacity,” says Bryan Land, the World Bank’s manager for this Mining Governance and Growth Project.

Further, the project will support the Government to acquire and manage geo-data thereby strengthening management of the resource endowment and its hand in negotiations with investors. To increase the supply of Malawians qualified in mining-related disciplines in order to meet the skills required for this growing sector in the country, the project will support the launch of degree-level and other tertiary education courses in mining.

The design of the Mining Governance and Growth Project benefits from the wide experience of the World Bank’s Oil, Gas and Mining Unit in delivering technical assistance and the findings of the Bank’s 2009 Mineral Sector Review. The World Bank’s approach to policy advice and technical assistance in the mining sector is guided by recognizing that the wider benefits of mining cannot be achieved without good governance of the sector. Clear regulatory mandates and strong institutions are needed which operate in a transparent way, and are accountable to stakeholders. Successful reform will minimize the diversion of resource rent along the extractive industries value chain, ensure that rent contributes to sustainable development and cater for the economic and social needs of communities where mining takes place.

The European Union will co-finance the project with about US$5.66million bringing the total value of the project to $30.66 million. Project implementation will be managed by the Ministry of Natural Resources, Energy, and Environment. The project is expected to close in September 2016.