The ninth Malawi Extractive Industries Transparency Initiative (Mweiti) report has forecast that revenue from the mining sector would not be enough to offset budget deficits by 2036.
The report projects that in the next two decades, mining revenue would average $300 million (about K525 billion) a year, which is even less than the 2026/27 fiscal deficit projected at K2.852 trillion,or 9.0 percent of gross domestic product (GDP).
The report, titled ‘Optmisation of extractive sector revenues and reduction of illicit financial flows’, projects that under the most optimistic scenario, the government would collect roughly $19 million (about K 33.25 billion) in 2026.
It said the collections that would be put into the yet to be established Sovereign Wealth Fund (SWF), would rise to $155 million (about K 271.25 billion) in 2027 and $622 million (about K1.1 trillion) in 2036 in nominal terms ($450 million in real terms) from the six modelled projects.
These projects included: Kanyika Niobium Project in Mzimba/Kasungu, Songwe Hill Rare Earth Project in Phalombe, Kayelekera Uranium Project in Karonga and the Malingunde Graphite and Kasiya Rutile Project in Lilongwe.
Reads the report: “Based on IMF [International Monetary Fund] fiscal revenue projections, this would imply that these six projects would represent no more than 17 percent of general government fiscal revenues in 2036. This is less than is currently needed to fill the budget deficit or service the public debt.
“Given that some projects may never come online, it is likely that mineral revenues will not exceed USD 300 million [about K525 billion] per year in nominal terms within the next two decades, possibly much less.”
Malawi’s mining fiscal regime is set out in the Taxation Act (2006) as well as the Mines and Minerals Act (2019), and main taxes are income tax, dividends Tax, royalties and fees.
Generally, Malawi’s mining sector remains small, at approximately one percent of GDP, but experts believe that it has significant potential once projects such as rutile, graphite, rare earths, and uranium come into production.
From the 2015/16 to the ninth report covering 2023/24 and 2024/25 fiscal years, an analysis shows that the country has raked in a total of K347.488 billion in the past 10 years since the beginning of Mweiti reports.
In the new report, Malawi raked in K56.6 billion in the 2023/24 fiscal year, and K103.78 billion in the 2024/25 year, which is equivalent to 0.73 percent and 1.05 percent of GDP respectively.
This past year, Shayona Cement paid K61.5 billion up from K22 billion the other year in revenue, while Raiply Malawi and Raiply EPZ Limited paid K13.3 billion from K12 billion the other year.
Malawi Confederation of Chambers of Commerce and Industry chief executive officer Daisy Kambalame recently urged Treasury to consider creating a private sector-driven Mining Investment Fund to increase revenue generation and management.
During a ministerial statement in Parliament in February, Minister of Energy and Mining Jean Mathanga said government is working towards increasing mining contribution to GDP to 20 percent by the year 2030.
Malawi has a diverse mineral resource base consisting of energy minerals – coal, uranium, oil, and gas; industrial minerals – REEs, bauxite (source of aluminum), and heavy mineral sands bearing titanium; construction materials – rock aggregates (such as granite), clay, limestone; and precious metals and stones mainly gold and gemstones respectively.
