Mining & Trade News

The Malawi Government has initiated a feasibility study for minerals revenue management and development of Sovereign Wealth Fund (SWF).

The study is supported by the UK-funded Malawi Value Chains (MVC) Project, implemented by Adam Smith International, in partnership with the Office of the President and Cabinet – in particular the Open Government Partnership (OGP) Technical Working Group on Natural Resources, the Ministry of Finance and Economic Affairs, and the Ministry of Energy and Mining.

A confidential draft of the Study prepared for stakeholder consultation reads that the feasibility study will provide evidence-based recommendations on the best options for effective management of revenues from mining for the country.

The study also aims to examine the most suitable revenue management systems, including various SWF models, based on evidence of the potential future revenue from the mining sector and economic, political and social context.

It says pecifically, the study will assess the potential scale and timing of revenue from Malawi’s mining sector, and variables that may influence this. The study will also identify and evaluate revenue management models suited to Malawi’s context, including SWFs.

It will also analyse the potential economic and social costs and benefits of different models; evaluate applicable potential risks and mitigating strategies, drawing from comparable case studies; identify and assess technical, institutional and legal framework barriers and provide recommendations and; develop an actionable implementation plan for the most salient revenue management systems or relevant SWFs tailored to Malawi’s existing policy, legal and regulatory framework Malawi is positioning itself for a minerals-driven economic transformation, with several mineral prospecting projects anticipated to reach final investment decisions in the next 2-5 years.

The report indicates that based on optimistic revenue projections for six of Malawi’s seven operating or prospective industrial mines (Kayelekera, Kasiya, Malingunde, Kanyika, Songwe Hill and Kangankunde), the Government could collect roughly US$19 million in 2026 and US$622 million in 2036 in nominal terms (US$450 million in real terms).

This translates that Malawi Government could earn not less than US$300 million per year at peak production. Under optimistic assumptions, these six projects would represent approximately 17 percent of general government fiscal revenues in 2036 (at current rates), less than is currently needed to fill the budget deficit or service the public debt.

As part of its OGP National Action Plan (2023–2025), the Government of Malawi commits to developing a Sovereign Wealth Fund. Before embarking on this journey, the OGP Taskforce thought it wise to first conduct a feasibility study on the establishment of such a SWF.

The report says as major mining projects advance and new investors show interest, Malawi has a window of opportunity to get its policies right. The insights and consensus built during the consultations will inform a sustainable, inclusive approach to resource management that can serve the nation for generations to come.

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