10 Questions I have after reading Malawi’s first EITI report

Malawi’s first Extractive Industries Transparency Initiative report was submitted to the Multi-Stakeholder Group in April by the Independent Administrator Moore Stephens. Last month, I shared the top 10 insights I gleaned from the report and this month I highlight 10 sets of questions that I have after reading the report. I hope to follow up many of these. It’s also up to the relevant stakeholders and MWEITI Secretariat to ensure correct information is in the public domain. Private sector, civil society and government representatives all had the opportunity to comment on the first report before it was finalised.

Next month, I will look at 10 recommendations for managing Malawi’s natural resources that emerge from report and some will touch on these questions. A shout out to Moore Stephen’s Ben Toorabally and Rached Maalej for their input.

1. Why did eight companies not comply?

(Mining sector: Shayona Cement, Kaziwiziwi Coal Mine, Intra Energy Trading, Malcoal Mining, and Premier Construction Equipments, Petroleum sector: Hamra Oil, Pacific Oil and SacOil Holdings). Curiously, although Hamra and Shayona did not comply, they both decided to congratulate the President on the first EITI report in the June Mining & Trade Review.

2. What were the reasons for large discrepancies between the company payments and government revenue?

3. Why did the Auditor General not certify the data templates submitted by government entities?

4. Did companies pay all amounts due? (For instance, did Mota-Engil pay royalties on all rock aggregate sold? Did Nyala pay all of the royalties due in accordance with its contract?)

5. What did Government entities do in order to ensure collection of amounts owed? Have tax verifications been conducted so far? How did government entities ensure independence of the officials responsible of verifying companies? Do Government entities have enough resources to ensure proper collection and verification of revenues?

6. How large will revenues from the extractive industries need to be before they are traced separately in the government budgeting process? Will a specific percentage of extractive non-tax revenues (royalties, ground rent) be systematically allocated for regional development?

7. Why are tailored contracts signed with private companies that do not appear to be in line with existing legislation?

8. There are few large-scale Malawian-owned extractive projects. If financial and technical capacity is the reason for this, is government considering requiring foreign investors in the extractive sector to establish consortium or enter joint ventures with Malawians?

9. Were all previous contracts awarded to companies operating in mining, petroleum and forestry sectors concluded without going through bidding process? If yes, does the government envisage changing this and promoting fair and transparent awarding procedures of all contracts without exception?

10. Why did most of the reporting companies fail to report their social payments? Did local communities benefit from any social payments?

Take a look at Malawi’s first EITI report here.

A version of this appeared in the June edition of the Mining & Trade Review.

This is part of a project I am doing as Publish What You Pay Data Extractors.

*This blog was first published on mininginmalawi.com