Malawi losing out on Kayelekera—UN

Visiting United Nations (UN) special rapporteur on the Right to Food Olivier de Schutter has said the Kayelekera Uranium Mine in Karonga is one of the investments in the country through which Malawi is losing a lot of its resources.

De Schutter told journalists in Lilongwe yesterday that the lost resources could have made a difference in food security and other pro-poor initiatives.

He also took a swipe at the country’s food security policies, saying despite being high-profiled, the policies, including the Farm Input Subsidy Programme (Fisp), have failed to rid the country of chronic food shortages and malnutrition.

Addressing journalists at the end of his 11-day tour of the country, de Schutter said currently Malawi is failing to make maximum use of its resources due to the illicit financial flows, tax evasion as well as tax incentives that the country offers to both domestic and foreign companies.

He said: “Mining companies are exempt from customs duty, excise duty, value added taxes on mining machinery, plant and equipment. They can also sign special deals on the rate of loyalty owed to the government. I believe that there are more reasons that investors would come to Malawi without such incentives.” De Schutter said revenue losses from special tax incentives to Paladin Africa Mining which runs the Kayelekera mine are estimated at almost K67 billion ($205 million) since the mine started its operations and could reach almost K92 billion ($281 million) over its 13-year lifespan.

He also faulted companies operating in the Export Processing Zones (EPZ) which he said also enjoy the same incentives, thereby costing the country’s economy even more.

De Schutter said it is estimated that the country has lost over 10 percent of its growth domestic product (GDP) to illicit outflows and tax evasion over the period 1980 to 2009.

He also noted that although government has recently introduced high-profile food security policies, more than half of the population remains in poverty with almost a quarter of the population being ultra-poor, earning less than the recommended UN daily wage.

On Fisp, de Schutter said although the programme has been an example of how hunger can be tackled through subsidies, it has failed to uplift the lives of poor Malawians.

He also said Fisp was partly to blame for the difficulties that the country’s budget faces almost every year, arguing that the current cost of the subsidy was straining other services such as agricultural research, extension services, training, rural roads as well as delays in the implementation of the Green Belt Initiative (GBI).

De Schutter also wondered whether Fisp is sustainable considering the rising costs of fertiliser imports and that so far it accounts almost one tenth of the total imports.

He also bemoaned the current minimum wage in the country currently at K371 ($1.12) per day, describing it as the lowest in the world.

The special rapporteur said he will give a report and his recommendations to both the UN Human Rights Commission and the Malawi Government