Someone better have an explanation and a damn good one too!
In his State of the Nation Address on May 22 this year that preceded the 2015/16 National Budget, President Peter Mutharika indicated that the mining sector’s contribution to gross domestic product (GDP) stood at six percent.
That was down from roughly 10 percent share that was being quoted for some time. But most of us were not surprised by the drop since Paladin Africa put its Kayelekera Uranium Mine (KUM)—the major source of the growth of the country’s mining sector—under indefinite care and maintenance, which meant that there would be no production at the project. That move fed into the national mining output shrinkage.
The company blamed its production suspension on the price collapse on the international market.
They do have a point given the impact of the Japanese nuclear disasters on the uranium industry globally on the price of yellow cake.
But I would also not rule out hostilities from the local communities and some national politicians as well as wild expectations of what the company should do in corporate social responsibility programmes as the other contributing factor.
In a nut shell, other than the pricing issue, the local operating environment was not conducive for the firm.
It faced too much pressure from too many self-serving characters claiming to be speaking on behalf of the poor and helpless.
But back to the matter of the sector’s drop in its contribution to the economy. How can the Head of State say that mining’s contribution to GDP is six percent on May 22 2015 and then two months later, we learn that the Ministry of Finance, Economic Planning and Development—in its latest annual economic report—put the figure at one percent? That is a six hundred percent contraction!
The mismatch could mean several things. First, that there has been a severe drop of five percentage points in just two months of the sector’s contribution within two months.
If that is the case, it could mean that the whole mining sector has ground to a halt—there is very little, if any, activity in the industry.
That should scare us all because as a country, we banked on mining to diversify the economy away from the climate change ravaged and land-squeezed agriculture sector, which constitutes at least 30 percent of GDP, accounts for over 80 percent of our export revenue and is the largest source of jobs for Malawians.
If indeed this is a dramatic drop, it means we should gaze into our mirrors and reflect on what it is that we have done that is repelling investors instead of attracting them. We should ask ourselves whether we fairly treated local large-scale mining trailblazer—Paladin Africa at Kayelekera—still by far the single biggest mining venture the country has ever seen.
We should ask whether Globe Metals and Mining, for example, has been handled professionally.
We should question whether the psychological torture we have exposed oil and gas exploration companies to with endless licence reviews augers well for instilling investor confidence.
The list is endless.
The second scenario is that someone inserted a wrong figure in Mutharika’s speech. If that is the case, then the question should be, why?
Was the insertion deliberate to mislead Malawians and the international community or it was to embarrass the President? Either way, someone has made the Head of State look like a cartoon at best and a liar at worst. The third picture is that maybe, just maybe, the President just dreamed up that figure on his own. If that is the case, then God help us!
The fourth possible situation is that there has been an error in the annual economic report. If that is the case, then there is no problem.
All the Ministry of Finance, Economic Planning and Development has to do is issue a statement acknowledging the error and withdraw that particular section of the report. Everyone will be happy.
Or will they?
Not if the statement from the spokesperson of the Ministry of Finance, Economic Planning and Development Nations Msowoya—who is a personal friend—is anything to go by.
Earlier, Msowoya had told The Nation that the current mining statistic (on percent) shows that the industry is not contributing much to the country’s GDP.
He, however, said the figures are likely to change depending on ongoing negotiations in the sector, including regarding niobium mining. He later changed tune, saying the State House and Ministry figures differed because Treasury made an error during computation. Really? That is not how it looks when you look at the ministry’s figures’ trend over the past three years.
And unless State House uses different data from Capital Hill, this statistical confusion sends a strong, but negative message about the Peter Mutharika administration: there is no coordination among various government ministries, departments and agencies. In other words, President Mutharika—the current government’s centre of power and authority—is not in control.
He also has wrong advisers who just pass on raw information to him without processing it.
No wonder he changes decisions just like he changes his suits! On a daily basis!