Navigating the Shifting Landscape: Harnessing Opportunities in Malawi’s Evolving Economy
Key Business Points
- Mining sector revenues in Malawi could reach over $200 million annually by the early 2030s, accounting for roughly 10% of the government’s income, under a "business-as-usual" scenario with the operationalisation of low-and medium-risk projects like Kayelekera uranium mine and Kasiya rutile project.
- The sector’s potential to deliver transformative payouts is uncertain and unlikely without radical reforms, with the World Bank cautioning that expected revenues would not be comparable to peak donor budget support before the 2013 ‘Cashgate’ scandal.
- To achieve substantial fiscal benefits from mining, Malawi will need at least five to ten years, highlighting the need for deliberate reforms, strong governance, and capacity to convert resources into tangible national gains, according to economist Velli Nyirongo, who advises that this is both a warning and an opportunity for the country to strengthen its institutional capacity.
The World Bank’s latest Public Finance Review, titled ‘Restoring Stability, Rebuilding’, estimates that government revenues from mining could reach over $200 million annually by the early 2030s, under a more realistic "business-as-usual" scenario. This assumes the full operationalisation of the only two low-and medium-risk projects, Kayelekera uranium mine and Kasiya rutile project. However, the bank warns that these revenues would not be transformative, accounting for roughly 10% of today’s government income and about 2% of gross domestic product (GDP).
The report highlights that the bulk of the revenues would come from corporate income tax, with much smaller contributions from royalties and dividends. A more optimistic "unconstrained" scenario, which includes several high-risk ventures like Makanjira heavy sands, Kangankunde rare earths, and Malingunde graphite, could see mining revenues rising to about 5% of GDP. However, the report cautions that both export and revenue forecasts are highly uncertain, except for Kayelekera and Kangankunde, as none of the major projects has reached a final investment decision.
Mining policy expert Paul Mvula lamented the slow pace at which the country has been moving in developing the mining sector, including slow investments in infrastructure. "If the country were to achieve economic growth, this sector is vital in that regard. But we cannot grow unless we have the infrastructure in place and reliable power to move forward," Mvula said. The World Bank estimates that Malawi could generate up to $30 billion from mineral exports between 2026 and 2040, with annual revenues expected to hit $3 billion by 2034. The country has vast mineral deposits, including gold, graphite, uranium, and rare earths, which could be a significant source of revenue if managed effectively.
To achieve substantial fiscal benefits from mining, Malawi will need to address its challenging macroeconomic conditions, poorly developed infrastructure, and opaque licensing processes, which continue to deter investors. The country should ensure adequate experience and technical support, including engaging transaction advisors who provide expertise and on-the-job learning, to negotiate fiscal terms effectively. As economist Velli Nyirongo noted, "This is both a warning and an opportunity for Malawi. There is a need to strengthen institutional capacity, particularly in contract negotiation and regulatory oversight." By doing so, Malawi can unlock the true potential of its mining sector and achieve economic growth, creating opportunities for local entrepreneurs and business owners to thrive. As the Chichewa proverb goes, "Mwana wa mzungu ndi ye modzi" – a child of a foreigner is still a child, emphasizing the need for Malawi to take ownership of its economic development and make the most of its natural resources.
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