Minister of Mining Thoko Tembo has challenged local commercial banks to rethink their approach to project lending, saying mining finance requires a deeper understanding of project cycles, commodity risks and technical studies.
The minister, speaking on Friday in Blantyre during the Annual Bankers Dinner and Dance, said conventional bank lending models often fail to capture the realities of mining ventures.
He urged banks to develop innovative instruments and partnerships to mobilise capital across different stages of mining development.
Said Tembo: “We will need partnerships and instruments that can mobilise capital at different stages of mining development.
that can mobilise capital. | Chikondi Chiyembekeza
“Let us finance Malawian businesses that want to supply the mining sector.”
His remarks come as Malawi’s mining industry, which currently contributes one percent to the gross domestic product (GDP), prepares for expansion, with three major projects set to be operational by 2028.
Kayelekera Uranium Mine in Karonga, which resumed operations in August last year, is expected to export its first uranium this year while Lindian Resources’ Kangankunde Rare Earths Project in Balaka completed its first production blast in July, positioning the mine for commercial output in the fourth quarter of this year.
On the other hand, Globe Metals and Mining’s Kanyika Niobium Mine in Mzimba has begun physical development works to move into the mining phase.
Together, the projects signal a sector on the verge of transformation, one that Tembo insisted will require banks to move beyond traditional lending frameworks.
He said turning Malawi’s geological potential into economic transformation requires capital finance, project finance, structured finance, equipment finance, trade finance and other financial instruments that recognise the different stages and risks of mining projects.
Bankers Association of Malawi (BAM) council member Thoko Mkavea noted that the mining sector is one of the most promising paths to economic rejuvenation, with data from National Planning Commission projecting that the sector can contribute 15 percent to GDP from the current one percent.
He said Malawi is endowed with various strategic minerals such as graphite, rutile, rare earths, but said the measure of that endowment will not be what Malawi extracts.
“It will be what we build from it. The opportunity before us is not mining as an end in itself,” said Mkavea, who is also CDH Investment Bank chief executive officer and managing director.
He said no single institution can industrialise Malawi, adding that government cannot do it alone, the mining industry cannot do it alone and the banks cannot do it alone.
“Lasting renewal will require coordinated effort among the State, regulators, financial institutions, investors, development partners, the private sector and local communities,” said Mkavea.
In her speech during the event that attracted personnel from the country’s eight banks and Reserve Bank of Malawi officials, BAM chief executive officer Lyness Nkungula said the annual gathering provides an opportunity to not only celebrate achievements and strengthen professional relationships, but also reaffirm the values that unite the banks as a profession.
She said banking is often associated with capital, liquidity and financial performance, but “the true strength of any banking system lies elsewhere”.
Chambers of Mines and Energy national coordinator Grain Malunga said that Malawi is gaining widespread recognition as Africa’s major mineral resource contributor.
