Eye on Malawi’s EITI: Malawi and Zambia meet on EITI

The piece “Eye on Malawi’s EITI: Malawi and Zambia meet on EITI” featured below was initially published in Malawi’s Mining Review Issue Number 28 2015 that is circulating this August 2015.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Examining Malawi’s journey towards EITI compliance with Rachel Etter and Leonard Mushani

Malawi and Zambia meet on EITI

All of Malawi’s neighbours – Zambia, Tanzania and Mozambique – were declared compliant with the Extractive Industries Transparency Initiative (EITI) three years ago. Malawi reached a decision to join EITI last year and this was officially announced by the President, Professor Arthur Peter Mutharika, during his inaugural State of the Nation Address. Since then, Malawi, under the guidance of the Ministry of Finance, Economic Planning and Development’s Revenue Policy Division, has been laying the groundwork to apply for the EITI to become a candidate country and then be deemed compliant two or three years later.

Malawi’s application to join the EITI was submitted by the government in July. A month earlier, in June, the Malawi Extractive Industries Transparency Initiative (MWEITI) team, made up of members and alternates in the multi-stakeholder group as well as other government officials, visited stakeholders from the Zambia Extractive Industries Transparency Initiative (ZEITI) in Lusaka. This study tour, funded by the Gesellschaft fuer International Zusammenarbeit (GIZ), was held to learn from Zambia’s vast experience of the EITI implementation process, as Zambia first signed up to the EITI in 2008.

Zambia decided to join the EITI because of the historical and on-going significance of mining to the country’s economy. In 2014, mining and quarrying contributed 7% to gross domestic product and the sector accounts for about 70% of exports and 2% of direct employment. According to the ZEITI Secretariat,

Historically there was no transparency and accountability in the mining sector. […and] There was also a perception that the mining sector was not contributing to the poverty reduction and sustainable economic development.

These factors motivated Zambia to join the EITI. In particular, through the EITI, mining companies wanted to show the public the size of their tax and royalty contributions to the country and the government wanted to publicise the revenue collected from the sector.

During the Malawian delegation visit to ZEITI from 21 to 27 June, 2015, the team, led by Grecium Kandio, Deputy Director in the Revenue Policy Division of the Ministry of Finance, Economic Planning and Development, had the opportunity to meet with stakeholders from civil society, government and industry who all agreed that the EITI has improved the mining sector. Meetings were held with senior officials in the Ministry of Finance and Ministry of Mines, Energy and Water Development, the ZEITI Council (the 18-member multi-stakeholder group of industry, civil society and government that directs the ZEITI implementation), the Zambia Chamber of Mines and civil society organisations. The delegation also had the opportunity to visit Munali Nickel Mine, which is currently on care and maintenance, and paid a courtesy call to the Malawi High Commissioner to Zambia.

In a visit to the Zambia Chamber of Mines, Maureen Dlamini, CEO, explained to the Malawian delegation that the

EITI has brought to the fore the contributions of mining […] questions have moved from what has been received to how is money being used by government. There is increasing accountability between all stakeholders.

This was confirmed by Siforiano Banda, National Coordinator of the ZEITI, who revealed that the EITI in Zambia has stimulated demand for accountability by communities on the receipt and utilisation of mining funds held by local councils. It has also served as a deterrent against tax evasion and misappropriation of funds by mining companies and government, respectively.

To date, Zambia has produced six EITI reports. In the last two reports, 30 companies reported data. The reports include data on taxes and other payments made to the Zambian Revenue Authorities, to local councils and to the ministries responsible for mining, land and finance, as well as revenue received through government’s minority interests in privatised mining companies and the social responsibility payments made by mining companies. Contextual information is provided in the report for mining as well as oil and gas, which, like Malawi, is in the exploratory stages. The availability of data and up-to-date contextual information has raised the level of debate around the extractive industries in Zambia and there has been more “fact-based conversation”, according to President of the Zambia Chamber of Mines, Matthew Banda.

Zambia has faced some challenges during its journey towards EITI compliance. Delays in the submission of data by mining companies and government agencies has slowed down the process, especially when companies did not provide information based on audited accounts, which is required by the EITI Standard. As a result, Zambia is developing an EITI policy and bill to ensure that companies comply with the initiative, especially in declaring beneficial owners, and that government agencies provide details that they “may not find palatable”, according to Ian Mwiinga, Communications Officer for ZEITI. The ZEITI Secretariat has also found that poor cooperation and communication between civil society organisations and inadequate and untimely funding for the Secretariat’s activities have been problematic for ZEITI implementation.

Shortly after the study tour, during the week of the 12 July, the Ministry of Finance, Economic Planning and Development issued a press release on MWEITI to explain the current status, to announce the EITI champion which is the minister responsible for finance, currently Hon. Goodall Gondwe, and the multi-stakeholder group members. By the time this edition goes to print, Malawi’s EITI application will be with the International EITI Secretariat in Oslo for review by the Board.

For more information about ZEITI, visit http://www.zambiaeiti.org/