Mining & Trade News

The World Bank says while Malawi is on track to generate meaningful revenue from mining activities in the coming decade, the earnings will not be transformative enough to drastically change the country’s dire economic situation.

In its 21st edition of the Malawi Economic Monitor published in July 2025, the World Bank notes that government revenues from mining could rise to as much as 5 percent of Gross Domestic Product (GDP) by 2033 under an “unhindered” scenario and this would represent a substantial increase in domestic resources but would not be enough to overhaul the economy.

“This projected fiscal revenue would be significant but not transformative as it is approximately equivalent to the general budget support that Malawi used to receive from international donors before the 2013 Cashgate scandal,” the Bretton wood institution states.

The report explains that most of the mining income will come from corporate income taxes, followed by royalty payments and profit-sharing agreements. However, these earnings are expected to materialize gradually over the next five to 10 years and only if the government is able to implement existing fiscal policies effectively and see key mining projects through to completion.

The report says that in a “business-as-usual” scenario which includes only low- to medium-risk projects like Kayelekera and the Kasiya rutile mine, annual revenues could exceed US$200 million by the early 2030s, equal to around 10 percent of Malawi’s current total fiscal revenue, or 2 percent of GDP.

The Bank explains that, an “unconstrained” scenario includes more ambitious and higher-risk projects such as heavy sands in Makanjira, rare earths in Kangankunde and Songwe Hill, niobium in Kanyika, and graphite in Malingunde, potentially increasing government income up to 5 percent of GDP.

It reads: “New estimates indicate that government revenues from mining could reach up to 5 percent of GDP by 2033, depending on whether high-risk projects are completed and whether government can successfully capture revenues in line with the statutory fiscal framework.”

In addition to mining, the report highlights the importance of energy sector investments, citing the Mpatamanga Hydropower Storage Project as critical to Malawi’s long-term economic prospects.

The Bretton wood institution warns that ongoing power supply challenges including inconsistent generation and grid instability continue to affect industrial growth and service delivery and in response, the government is encouraged to fast-track projects like Mpatamanga to provide a more reliable and sustainable electricity supply.

It also states that, in May 2025, the World Bank Group’s Board of Directors approved a US$350 million grant from the International Development Association (IDA) to fund Phase 1 of the Mpatamanga Hydropower Project.

“The full project is expected to cost US$1.25 billion, with the remaining US$900 million expected to come from a consortium of development finance institutions.”

The report reads that the Mpatamanga project is one of the most transformational initiatives currently on the table. It will provide clean, firm energy to stabilize the national grid, reduce power outages, and support Malawi’s participation in regional power-trading markets, particularly through the Mozambique-Malawi Power Transmission Project.

The report also urges the government to implement reforms in the energy sector, including full adherence to Malawi Energy Regulatory Authority’s four-year electricity base tariff schedule. This will ensure the Electricity Supply Commission of Malawi (ESCOM) can cover operational costs, avoid debt accumulation, and invest in future upgrades.

“Despite political challenges, adherence to a cost-reflective tariff is important to enable ESCOM to effectively maintain the power network and save for future improvements,” the report advises.

The report concludes by urging Malawi to adopt urgent and targeted reforms both in mining and energy sectors to fully harness the benefits of ongoing mega projects and direct the country towards sustainable development.

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