Malawi Mining Investment Company (Mamico) says the establishment and proper coordination of the mining investment fund will help ensure strengthening investor confidence, support sustainable mineral development and deliver long-term economic benefits for Malawi.
Mamico’s position follows calls by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) for Treasury to consider creating a private sector-driven Mining Investment Fund to increase revenue generation and management.
In a written response on Tuesday, Mamico chief executive officer Leonard Kalindekafe said such a fund could play a strategic role primarily as a national development, financing and capital mobilisation vehicle, as mining takes a long time to start harvesting the results, making it difficult for a single person to secure enough financial resources to go into mining.
He said given their mandate to spearhead government’s equity participation, joint ventures, and value addition projects, it would be logical for the fund to also serve as a financing mechanism to bankroll their-led strategic investments, alongside other national development priorities.
Said Kalindekafe: “Readily available and targeted financial resources would definitely assist in promoting our mining industry.
“In addition to speeding up mines development, the fund will also help in ensuring that adequate financial resources are also available to support downstream processing, skills development, small and medium enterprises linkages and community development. These objectives are aligned with government’s broader policy direction of maximising value addition in the mining sector’s value chain.”
MCCCI chief executive officer Daisy Kambalame said the fund would capture royalties, taxes and equity stakes from new projects to build reserves for future generations, stabilise budgets during commodity price fluctuations and fund infrastructure needed for mining viability.
The call also comes months after Malawi committed to create a sovereign wealth fund, a State-owned investment fund that manage the country’s surplus revenue to generate economic benefits for its citizens, improve management of proceeds from mining, a sector identified as a catalyst towards achieving Malawi 2063 (MW2063), the country’s long-term development plan.
It also comes as revelations show that long seen as a mandatory tool to attract foreign direct investments, mining tax incentives have lost their allure, according to the International Institute for Sustainable Development.
MW2063 has identified mining as the fastest route to achieve targets in the strategy’s First 10-Year Implementation Plan.
Mining contributes roughly one percent to the country’s gross domestic product.
