Dismantling Malawi’s resource curse

In the abundance of water, the fool is thirsty’ – Bob Marley

I do not want to classify Malawi as a nation of fools, but an adaptation of the resource curse concept makes Malawi just that – a nation of fools. Richard Auty coined the term ‘resource curse’ in 1993 in reference to countries that experience significant underdevelopment yet they possess abundant natural resources, minerals, oil and gas.

Also referred to as the ‘paradox of plenty’ by Terry Lynn Karl, Jeffrey D. Sachs, and Joseph Stiglitz, key features of the resource curse include conflicts, weakening of democratic institutions, corruption and poverty. Classic examples of the resource curse are DRC, Nigeria, Angola and other resource-rich states of Sub-Saharan Africa. However, Botswana has managed to escape the resource curse partly because of the country’s commitment to strong economic policies, disciplined political processes and a developmental focus.

Malawi possesses abundance of extractive resources with deposits of minerals from gold, uranium, coal, rare earths, bauxite, rubies, and phosphates. Oil and gas deposits were also recently discovered on Lake Malawi and its shores although their exploitation are subject of heated contestation.

Mining activities have taken place in Malawi. For example, coal mining in Rumphi and Karonga, uranium mining at Kayelekera, Malawi rubies and rare earths in Ntcheu and Mount Kangankunde, and several other operations in Phalombe, Mzimba and Mangochi. Recent news about discovery of gold deposits and rutile in Kasiya – Lilongwe rural, brings another dimension to the discourse.

Malawi suffers own version of the resource curse. Mining operations only contribute less than 1 percent of Gross Domestic Product (GDP). Job creation is less than satisfactory. The excitement which

accompanied the opening of uranium mine at Kayelekera in Karonga was short-lived. The same applies to coal mining at Mwabulambo in Karonga. Eland Coal Mining, the company which operated the site later abandoned the investment after a few years.

Ntcheu and Neno districts continue to suffer episodes of illegal mining. For decades, so called investors have taken large samples out of Malawi in the name of conducting tests whose results were never published. On the other hand, Malawi has suffered from companies operating without proper licenses. Some have used prospective licenses while others have abused exploratory licenses to engage in actual mining and stealing of precious stones.

Malawi government has been reluctant to embrace transparency and accountability mechanisms especially in the fiscal regime for managing revenues until recently, when the Extractive Industries

Transparency Initiative (EITI) was adopted in 2016. For decades, mining companies had the upper hand in negotiating mining contracts owing to Malawi government’s weak capacity.

Malawi has benefited little in terms of royalties, corporate taxes and other forms of mining revenue streams. Corrupt government officials, unpatriotic politicians, and patronage networks have also connived to plunder mineral wealth.

Meanwhile, poverty in Malawi continues to deepen at 50.7 percent, and 25 percent living in extreme poverty. The current rise in cost of living only worsens the situation. Prices of goods and services are

unstoppably rising, with annual inflation hitting 24.6 percent. Access to education is under threat while health service delivery is on the blink of collapse as stocks of drugs and medicines could dwindle.

Security situation is also worsening.

Malawi’s resource curse is compounded by the rise in corruption as public funds are plundered incessantly. The current energy crisis and electricity shortage could be a new form of resource curse tightly gripping Malawi. In the abundance of water, Malawi cannot generate enough electricity.

In the abundance of solar energy, Malawi cannot produce adequate power. In the abundance of wind, Malawi cannot run turbines to light up homes and power industries. It will take committed, visionary

and patriotic political leadership to stop the resource curse.