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Mulanje Massif, Malawi

Malawi

Status
Meaningful progress
Joined
22 October 2015
Latest validation
2019
Latest data from
2017
Visit the country website

Overview and role of the EITI

Malawi is a small producer of uranium, gemstones, coal and construction materials, and the government is promoting investment in petroleum and minerals such as graphite. Mining is does not play a large role in Malawi’s economy, accounting for less than 1% of the national GDP in 2020. The forestry sector accounted for about 7% of GDP.

The government has indicated plans to improve the regulation of the mining sector to develop the economy. Malawi EITI (MWEITI) has been using the EITI process and reporting to inform dialogue on regulation of the sector, revenue sharing at the community level and measures to mitigate corruption.

Economic contribution of the extractive industries

1.1%
to government revenues
0.6%
to exports
0.9%
to GDP
0.2%
to employment
  • Step 1
  • Step 2
  • Step 3

Download country data

Download open data on government and company revenues, revenues by revenue stream and indicator, summary data and more.


Innovations and policy reforms

  • Malawi EITI has facilitated discussions aimed at addressing anti-corruption allegations in the renewal of a mining license. The case is currently under review at the Anti-Corruption Bureau (ACB), with progress updated in EITI Reports.
  • Recommendations from Malawi EITI Reports, for example on amendment of extractive sector fees, have informed debates and discussions and contributed to the development of the 2019 Mines and Minerals Act
  • Malawi EITI has used EITI reporting to improve transparency of the country’s forestry sector, a significant contributor to government revenue and national GDP.

Extractive sector data

Production and exports

Limestone

Revenue collection

Level of detail 2

Revenue distribution

2017
Standardised revenue types

Top paying companies

2017

Extractive sector management

Licenses and contracts

Mining licenses are awarded on a first come first served basis, while oil and gas licenses are awarded through restricted competitive tenders. Malawi has a public mining cadastre available online.

The Mines and Minerals Act provides for the establishment of a Mineral Resources Committee – composed of professionals in mining, geology, environmental issues, land and physical planning, police and customs – which assesses license applications and makes recommendations on license awards. Mining legislation also allows for the Minister of Mines to conclude agreements with extractive companies directly.

While Malawi does not have legislation mandating the disclosure of contracts, some extractive contracts are disclosed via resourcecontracts.org.

Beneficial ownership

Malawi does not have a legal framework mandating the disclosure of beneficial owners. However, the Department of the Registrar General (DRG) implements the Malawi Business Registration System (MBRS) which collects ownership information of companies. The Financial Crime Act (2017) provides a definition of beneficial ownership.

Revenue distribution

Malawi’s mining and oil and gas legislation does not provide for subnational transfers of extractive revenues. To strengthen transparency over expenditures, Malawi EITI reporting discloses payments related to the transport sector, training levies and social payments.  


EITI implementation

Governance

Malawi EITI (MWEITI) is administered by the Malawi Multi-Stakeholder Group (MSG), which is hosted by the Ministry of Finance. The MSG is chaired by Mr Kenneth Matupa, Director of Revenue at the Ministry of Finance. The MSG is comprised of members from government, industry and civil society.

Validation

Malawi was found to have made meaningful progress in implementing the 2016 EITI Standard in February 2019, following its first Validation. The Validation identified 8 corrective actions to be addressed by the country’s next Validation, commenced in January 2022.

Timeline

Scorecard

Latest Validation: 27 February 2019
Year

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Scorecard by requirement View more Assessment View more

Overall Progress

MSG oversight

1.1Government engagement

The government is fully engaged, and agencies are cooperating to address recommendations from reporting and EITI Requirements.

1.2Industry engagement

Companies participate actively in the MSG’s work, and the Chamber of Mines and Energy effectively engages with its members on EITI issues. However, companies not members of the chamber have limited opportunities to participate, and there is a lack of adherence to data quality assurances agreed by MSG (see Requirement 4.9).

1.3Civil society engagement

Civil society is an active stakeholder in the process and can fully engage. CSOs support the EITI, use it to promote reforms and produce analysis of the sector. Networks that enable coordination have been successfully formed.

1.4MSG governance

The MSG functions in an equitable and effective manner, and the ToR is followed. Constituencies are adequately represented. The nomination process of CSO members was free and transparent.

1.5Work plan

The work plan is linked to priorities and includes relevant activities, but the level of stakeholder consultation remains unclear and funding has not been identified for most activities. The plan has not been widely available to the public.

Licenses and contracts

2.1Legal framework

MWEITI provides a description and overview of the existing legal and fiscal frameworks. This also encompasses on-going reforms and recommendations for further reforms.

2.2License allocations

License awards are covered while no transfers occurred during the reporting period. The process for awards and transfers are fully detailed in legislation and in the report. No evidence suggests any deviations from statutory procedures. Descriptions of technical and financial criteria used, though limited, is deemed sufficient.

2.3License register

The Department of Mines systematically discloses information through a license registry. Coordinates are not explicitly detailed, but contracted areas are visible on a scale of 1:5,000. The score has been downgraded due to limitations with petroleum license data.

2.4Policy on contract disclosure

The 2015-16 EITI Report describes key provisions and regulations related to contract transparency. There is no government policy preventing disclosure of contracts. The government has not published contracts themselves, but the report and MSG confirm that Malawi relies on third-party disclosures through ResourceContracts.org.

2.5Beneficial ownership

Not assessed

MWEITI has clarified the government’s policy and legislation on beneficial ownership disclosure. A beneficial ownership roadmap is published, and the report discloses beneficial owners for some companies. Legal owners of each material company are included in the report, referencing securities exchanges where several companies are listed.

2.6State participation

Not applicable

MWEITI demonstrates that the state participates through minority shares in two operations, that are not material or significant. Ideally, they should have clarified that status of the National Oil Company of Malawi (NOCMA) but publicly available data implies that NOCMA was not relevant during the period under review, according to the definition provided under Requirement 2.6.a.

Monitoring production

3.1Exploration data

The 2015-16 Report provides a current overview of the extractive industries, and lists the main type of mineral reserves, prospective projects, and a brief history of the sectors in Malawi.

3.2Production data

The report includes production volumes and values for each commodity, by company and license. MWEITI supplementing data from different sources when unavailable or unreliable. Malawi have gone beyond the minimum requirements by highlighting differences between different reports and provides recommendations for improving production statistics.

3.3Export data

The MWEITI Report covers available data for export volumes and values for all commodities, combining various sources to ensure comprehensiveness. Differences in numbers are noted, although the methodology for ensuring comparability is not identified.

Revenue collection

4.1Comprehensiveness

MWEITI succeeds in setting materiality thresholds for payments, revenue streams and for companies, adequately describe reporting entities, and identifies non-reporting companies and their payments. Omissions were not considered to influence comprehensiveness of reporting, however, the EITI Board could not guarantee that all payments were included.

4.2In-kind revenues

Not applicable

There are statutory provisions for royalties in mining, oil and gas sectors enabling in kind payments, at the discretion of the Minister of Natural Resources, Energy and Mining. However, the report and stakeholders confirm that no in-kind payments were made by either mining or petroleum companies during the period under review.

4.3Barter agreements

Not applicable

MWEITI claims there were no infrastructure nor barter arrangements. The report still describes one contract with such provisions, without stating if it is material. But, all stakeholders agreed that the contracts only cover social expenditures, not transactions of physical goods or terms in exchange for license awards; treated under Requirement 6.1.

4.4Transportation revenues

Not applicable

The report unilaterally discloses total government revenues from the mineral transportation sector. Concession fees amounted to MWK 336 715 113 in 2015-16, but since no company is partially owned by the government, nor involved in upstream extractive sector activities, the requirement is not applicable.

4.5SOE transactions

Not applicable

The International Secretariat’s initial assessment is this requirement is not applicable in Malawi. For more details please refer to requirement 2.6 on state participation and the existence of state-owned enterprises.

4.6Direct subnational payments

Not applicable

The 2015-16 MWEITI Report presents ambiguous statements of the applicability of direct sub-national payments in Malawi, but further documentation and stakeholder consultations confirm that no such fees are extractive specific nor material.

4.7Disaggregation

Reconciled financial data in the 2015-16 EITI Report is disaggregated by company, revenue stream and government entity. The report also presents recommendations for further disaggregation of data by individual project.

4.8Data timeliness

The MWEITI report was published within the two-year deadline of the EITI Standard, although online access was not as timely. Stakeholder consultations also revealed that companies are willing and able to provide more timely data, if provided with reporting templates in alongside other reporting processes.

4.9Data quality

MWEITI deviates from the standard procedures, but all are met by an expanded inception report. However, public access to the report must be ensured. The does not conclude that data is reliable, but stakeholders remain confident. However, contrary to the overall objective of #4.9, only three companies adhered to quality assurances, limiting data quality.

Revenue allocation

5.1Distribution of revenues

Extractive sector revenues are largely recorded in the single treasury account. Some revenues are retained internally in off-budget funds, such as the Petroleum Training Fund, managed by the Department of Mines. But significant information is missing or unclear, with no values reported through EITI or otherwise.

5.2Subnational transfers

Not applicable

The 2015-16 MWEITI Report presents ambiguous statements of the applicability of sub-national transfers in Malawi, but further documentation and stakeholder consultations confirm that there are no such transfers in Malawi.

5.3Revenue management and expenditures

Not assessed

MWEITI has made some attempt to including information on the budget-making process through references and documentation of the budget framework of Malawi for 2015-16. The general description of the key documents and procedures related to the budgeting process provides a clear guide for interested readers and users of the EITI Report.

Socio-economic contribution

6.1Mandatory social expenditures

The report covers mandatory social expenditures for two mining companies and all petroleum sector companies. But almost no payments are reported nor is any reason for lack of payments identified. Reported mandatory social payments are not disaggregated sufficiently. The report does describe and disclose voluntary social payments associated with one reporting oil and gas company.

6.2Quasi-fiscal expenditures

Not applicable

The International Secretariat’s initial assessment is this requirement is not applicable in Malawi. For more details please refer to requirement 2.6 on state participation.

6.3Economic contribution

Estimates are provided for the extractive sector’s contribution to gross domestic product, exports, government revenues and employment, and areas of significant operations. No estimates were provided for the informal sector’s contribution, although estimates are available for the artisanal and small-scale miners’ contributions.

Outcomes and impact

7.1Public debate

EITI Reports are comprehensible, and CSOs and the media are spreading awareness. Especially contract transparency has contributed to public debate. Data is available in open formats and its use is not restricted.

7.2Data accessibility

Not assessed

MWEITI has made efforts to make data accessible. There is further potential for systematic disclosures.

7.3Follow up on recommendations

MWEITI has produced remedial action plans, which it used to follow up on recommendations from reporting. Government agencies have collaborated to address recommendations, and the MSG has discussed progress.

7.4Outcomes and impact of implementation

The annual progress report captures activities and follow-up on recommendations but lacks a review of the impact of EITI implementation. The description of progress in meeting EITI requirements is vague.


Key documents


Contacts