Formalising the sector facing challenges.
The extractive sector in Madagascar contributed USD 61 million to the economy in 2014 according to the country’s recently published EITI 2014 Report. The sector accounts for 30% of total exports and 4% of GDP. The vast majority of revenue comes from the mining sector (USD 56 million) with the rest from petroleum. But it is the informal mining sector that employs the most people – up to 500 000 according to the Report.
Look what’s inside
Madagascar is an island nation with a wealth of gold and precious and semi-precious stones including emeralds, rubies and sapphires. Most of these are mined informally and the inclusion of export figures of these minerals in Madagascar’s latest EITI Report gives an insight into the informal sector’s contribution to the economy. For example, the Directorate General of Mines stated that USD 14 million of precious stones were exported, whilst, according to statistics from the United Nations Conference on Trade and Development, USD 46 million of gold were exported in 2014.
The difficulty of formalising the informal
The government has undertaken a number of efforts to formalise the sector. First, an export ban was in place from 1999 to 2004 and 2008 to 2009. Then gold miners and exporters were required to obtain a permit from the local authorities. But this has not been fully implemented.
The 2014 mining policy included incentives for the local communities to support local production and creation of value from these minerals. Environmental conservation was also an objective of the policy.
The EITI requires disclosure of an estimate of informal sector activity and its contribution to the economy. The 2014 EITI Report provides a recommendation on information that should be provided on the economic impact of ASM on government revenues, suggesting studies be conducted on the matter.
In a recent interview, Ying Vah Zafilahy, the Minister of Mines announced efforts to reinforce local government to collect mining revenues from small scale mining.
Image: Wikimedia Commons.