Malawi’s gold market takes shape

 Malawi’s gold market takes shape

Malawi’s gold market takes shape.

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By the end of the year, Malawi’s newly introduced Structured Gold Market is expected to spend MK936 million on buying gold from licensed Artisanal and Small-Scale Miners (ASM).

According to the Reserve Bank of Malawi (RBM) Governor, Wilson Banda who appeared before the Parliamentary Committee on Natural Resources and Climate Change to explain why the central bank, which is responsible for supervising the gold market, was buying the commodity from illegal miners, the bank has since opening its doors to both licensed and unlicensed small-scale gold miners in May, purchased 15 kilograms of the precious metal worth MK600 million, which, if processed, is valued at $2 million or K1.6 billion.

He explained that government set up the structured market to minimize exploitation of the miners by illegal buyers, who use dishonest scales so that the weight of the gold is lower than the actual weight while other miners say they sell their gold to the buyers at very low prices because they do not know where else to sell their gold.

Banda, then explained that RBM purchases gold only from unlicensed miners who are under the formalization initiative by the Ministry of Mining. The initiative is being facilitated by the Export Development Fund, a subsidiary of RBM mandated to promote the growth and diversification of exports as well as accelerating structural transformation in Malawi through financial and non-financial interventions.

Banda further said that the decision to buy from the illegal miners was arrived at after noticing that the bank’s initial buying price ranging from MK20,000 to MK40,000 per gram had been outpaced by illegal buyers from Mozambique, India and China, who were purchasing at higher prices.

“We were forced to raise the price range to MK38,000 to MK46,000 per gram,” Banda said.

It is reported that the ASM sector, which is patronized by the unemployed, people with high illiteracy levels and who do not care about environmental degradation, has provided employment to over one million people in the whole Southern African Development Community (SADC) region.

The Structured Gold Market is government’s response to the need for the country to achieve sustainable socio-economic development by supporting local unskilled miners who are trying to earn a livelihood without a capital base or basic mining and geology knowledge. Though it has embraced customary gold mining practices, it promotes environmental protection and widens governments’ tax collection base.

“The benefits of this initiative are comprehensive prices, instant payment, secured market and improved livelihoods for the ASMs,” said Banda adding that the initiative will train ASMs and educate communities in different subjects including environmental protection; lead in transfer of modern technologies for improved extraction; support ASM cooperatives in securing credit facilities from financial institutions; and closing the existing knowledge gap for ASM related issues through introduction of mining desk officers in district councils.

ASM provides an alternative source of income during the dry season when farming activities are their lowest ebb.

Malawi Revenue Authority (MRA), Head of Corporate Affairs, Steve Kapoloma, has said the revenue collection body has collected revenue amounting to over MK30-million in the 2018 – 2019 financial year; MK37.7-million in the 2019 – 2020 financial year and; MK29.6-million in the financial year of 2020 – 2021.

The gold is being extracted in Lilongwe, Kasungu, Nkhotakota, Nkhata Bay, Dowa, Balaka, Neno, Machinga, Ntcheu, Chitipa and Mangochi districts.

Meanwhile, ASMs, through Nyasa Mining Cooperative (NMC), have hailed the Malawi Government for hosting the Southern Africa Development Community (Sadc) Heads of State summit saying it has played a great role in exposing local mineral products to regional buyers.

Charles Mkula

Charles Mkula has over 15 years of working as a Malawian newsroom news reporter and editor as well as a freelance journalist for a number of international news outlets, Charles Mkula has worked as a Public Relations Officer for a Malawi/Germany urban development project. He co-founded Hyphen Media Institute, a platform for sharing information generated from policy debate and advocacy activities. Charles likes reading, writing, traveling, exercises, making friends, listening to music, watching TV, documentaries and cartoons.

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