MALAWI MINING: HOW INVESTMENT INCENTIVES COULD PLAY A KEY ROLE

Malawi needs to introduce specific investment incentives to attract investors to its mining sector, which is considered high-risk but offers long-term stable revenue potential.

Minerals and geology expert Grain Malunga suggests designing benefit-sharing thresholds to attract investors by ensuring favorable conditions during the long pre-production phases where no revenue is generated.

Malunga emphasizes that mining investment requires careful consideration of commodity price risks, exchange rates, and global geopolitical factors. He also points out the necessity of attracting and training new talent to replace aging geologists and engineers through tax incentives like waiving non-resident tax and taxes on management fees for expatriate workers.

Currently, the sector is subject to various taxes, including a 30-35% corporate income tax, 16.5% VAT, 20% withholding tax, and a 15% resource rent tax. Investment incentives include a 100% allowance on start-up capital expenditure, duty-free importation of specialized goods, a 10-year stability period from project commissioning, and potential tax holidays.

Minister of Mining Monica Chang’anamuno expressed optimism about improving the mining sector through deliberate initiatives aimed at creating a conducive investment environment.

The government aims to formalize the Artisanal and Small-scale Miners Act, anticipating this will boost production of gemstones and other minerals, thus stimulating economic growth. The Ministry of Finance projects the mining sector to grow by 5.8% in 2024 and 6.7% in 2025, contributing more significantly to Malawi’s economy.

 

SOURCE: NationOnline

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