Value addition key to mineral revenue
Lack of value addition and continued smuggling for illicit uses continue to undermine the country’s revenue from gemstones, one of Malawi’s mineral products currently being extracted and exported, it has emerged.
Data from the Chamber of Mines also quoted by the Malawi Government Annual Economic Report 2024 shows that the country produced 793 tonnes of gemstones and earned K539.3 million in 2023/24 fiscal year.
In an interview on Tuesday, the chamber’s national coordinator Grain Malunga said the informal nature of small-scale gemstones mining business discourages access to finance and technology, as such, it becomes difficult for proper regulation and value addition.
“We need to have incubation centres that promote cutting and polishing coupled with simple business entrepreneurship courses,” he said.
Malunga, a geologist and a former minister of Energy, said the investment in value addition could generate significant income, provide employment opportunities and create business opportunities in jewellery production and selling.
Meanwhile, the Malawi Government Annual Economic Report 2024 acknowledges serious challenges suppressing growth of revenue in the sub-sector, which, being one of the precious and semi-precious stones would be highly profitable.
Among others, according to the report, the Ministry of Mining faces challenges to compile exact data for gemstones because of several hurdles that impede the collection of accurate production data.
Reads part of the report: “While the mining legislature requires licence holders to declare their production, it is difficult to enforce as most artisanal and small-scale miners lack the literacy and technical know-how to fulfil this obligation.
“Gemstones are subject to rampant smuggling for illicit uses such as money laundering. The ministry is only able to monitor production from registered cooperatives, other small-scale miners who have the know-how and ability to comply with reporting obligations.”
In a separate interview, geologist Ignatious Kamwanje said apart from low value addition, which erodes the potential of the sector, there are many middle-men involved in the gemstones business which affects profitability of actual miners.
“This is because gemstones pass through many hands such that each buyer also behaves as an agent to another seller and it is sold at a complicated profit. If this was sold locally, all the profits can be realised in the country by the government.
“We can make the subsection more rewarding by engaging miners to form cooperatives and government should also encourage value addition by facilitating gemstone sellers and miners in getting loans from lending institutions.
Meanwhile, the annual report projects slow revenue growth in gemstones due to low value addition, observing that while production will rise from 793 tonnes to 872.3 tonnes in 2024/25 and 959.5 tonnes in 2025/26, revenues will grow from K539.3 million to K593.2 million in 2024/25 and K652.9 million in 2025/26.
