Malawi is classified as one of the least economically developed nations in the world and has been largely reliant on foreign aid over the past decades. The country’s economy is principally dependent on agriculture, which accounts for over 37 percent of the gross domestic product and 85 percent of total exports. Furthermore, Malawi was listed 171st in the world in the “Ease of Doing Business 2014” rankings, and this problematic economic environment has not helped investment or economic growth.
Fortunately, however, Malawi sits on top of significant reserves of coal and uranium. Among others, Will Dawes, the chief executive of Canada’s Mkango Resources, believes Malawi may possess some of the largest rare earth deposits in Africa. The development of the nation’s incipient mining industry is already showing promising signs. However, the key to ensuring that Malawi maximizes the potential benefits of these natural resources is to provide its government with the tools to increase investment into the sector while installing a structure of good governance to allow the country to capitalize on any future revenue derived from the industry.
Since 2013, Adam Smith International has been implementing The Malawi Fiscal Regime Review, a World Bank and EU-funded project, which seeks to:
Establish a coherent, standardized and globally competitive fiscal regime.
Equip officers from the revenue-collecting institutions with skills and tools that will enable them to accurately estimate and collect taxes.
Equip revenue officers with the tools to conduct mineral revenue forecasting.
This project hopes to achieve the vital dual objectives of ensuring a more investor-friendly business atmosphere while establishing a sustainable revenue stream for an impoverished state budget. That this work is being carried out at such an early stage of Malawi’s mining sector is of particular significance. There is the potential to set up the effective structures, institutions, procedures and precedents which will allow Malawi to maximize the potential revenue from the mining industry from the very beginning.
Read more at theguardian.com