Mining & Trade News

An umbrella body of civil society organisations (CSOs) working in Malawi’s extractive sector, the Natural Resources Justice Network (NRJN), says there is need for more local investors in foreign resource firms working in the country in order to promote inclusive and sustainable economic growth.

Coordinator for NRJN Kennedy Rashid told Mining and Trade Review in an interview that encouraging Malawians to own shares in mining companies will significantly increase local participation in large-scale mining in so doing scaling up benefits for Malawi.

Rashid pointed out that local shareholding in foreign companies aligns with principles of resource nationalisation, where by a country's citizens are directly involved in the ownership and management of natural resources. 

He said: “CSOs also believe that local shareholding would foster accountability and transparency within the mining sector, as Malawian shareholders would have vested interests in the governance and operations of these companies.”

“However, there are several structural and systemic barriers that must be addressed to make this a reality. Some of the issues include lack of adequate knowledge about the stock market and the potential benefits of investing in shares whereby limited financial literacy means they are unaware of how shareholding works or how it can benefit them in the long term.”

He said lack of disposable income among many Malawians has also been a challenge in investing in shares.

“Malawi's capital market is underdeveloped, and opportunities for citizens to buy shares in mining companies are not widely accessible. Investing in shares is seen as risky, especially in an industry like mining, which is prone to price fluctuations and operational risks,” Rashid said.

He, however, said despite the challenges, local ownership in mining investments can bring a lot of benefits including enhanced wealth distribution as local shareholding would ensure that more wealth from mining remains within the country creating opportunities for wealth distribution among ordinary citizens; capacity building and fostering national ownership; and strengthening the financial sector.

Rashid, therefore called for collaboration among CSOs, the private sector and Government, and mainstream mineral sector players on several fronts on financial education campaigns; mainstreaming policy reforms; and increasing access to capital to create an enabling environment for local shareholding.

Mining Expert Ignatius Kamwanje backed the recommendation from the CSOs saying it will spearhead sense of ownership as well as boosting the economy through dividends.

“On top of taxes. buying shares enhances a sense of ownership of the minerals by the locals. It is also a way of economic empowerment through dividends,” Kamwanje said.

However, Coordinator for Chamber of Mines and Energy Grain Malunga said in a separate interview that currently Malawi does not have mining companies registered on Malawi Stock Exchange hence it would be difficult to implement the proposal.

Seasoned Geologist and Mining Expert John Nkhoma, however, commented that though there is no problem in buying shares in the large scale mining companies, Malawians have to understand that it requires foreign exchange.

He, however, said it requires patience to start benefiting from investing in shares in mining companies taking into account the long time it takes for a mine to reach production stage hence wondered if many Malawians can manage to wait for such a long period before starting to reap from their investments.

“The main problem is that many Malawians want to see immediate returns,” said Nkhoma.

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