Extractive industry central to Malawi’s economic diversification’
The public and private sector must provide necessary attention to growing the extractive industry, which has the potential to productively facilitate Malawi’s economic diversification from agriculture, a solo pillar of the local economy since time immemorial.
Zodiak Broadcasting Station's Online Editor, Winston Mwale, said this in his paper titled 'Contractual Ties and Their Impact on Tax' presented at the three-day Africa Tax Administration Forum (ATAF) media engagement conference in Kigali, Rwanda.
He based his presentation on a story he authored titled ‘After Babel, a New Common Language Emerges’ which scrutinised losses to mining fields surrounding communities and gaps that lead to exploitation.
Mwale said local investors and financiers should focus at taking more opportunities in the extractive industry’s budding ventures, while Government must set necessary policies including regulations to curb exploitation of mineral resources in order to earn the much expected fees and taxes from the industry.
“As a country, we lost out potential revenue on some initial mining ventures. But it is now good to note that the Government has revised necessary laws of the sector. More capacity building is underway to ensure that Malawi rightfully earns the required income through domestic revenues and close financial leakages that miners use in illegal externalisation of funds,” said Mwale.
Last month, eight Malawi Government agencies signed a Memorandum of Understanding establishing an initiative to fight illicit financial flows and transfer pricing in the country after it was discovered that the economy lost US$395 million (about K240 billion) through unauthorised externalisation of foreign exchange.
The institutions that are implementing this initiative include Malawi Revenue Authority, Reserve Bank of Malawi, Police, the Office of the Director of Public Prosecutions, Immigration and Citizenship Services, the Anti-Corruption Bureau and the Financial Intelligence Authority.
ATAF Director of Tax Programmes Mary Baine said the continental body is impressed with the interest that the media continues to show for their respective countries to achieve steady financial independence.
“The narrative on generating adequate domestically mobilised resources, of which taxes are substantial, should be relentlessly pursued by the media while maintaining the oversight role of accountability. This is because right amounts of taxes should translate into robust economic activities.
“In turn, Governments in Africa will be guaranteed of sustainable supply of funds to support infrastructural development projects and provision of efficient social services. When people are communicated to that the taxes they pay has resulted in access to these services and utilise such infrastructure, it heightens voluntary tax compliance,” she said.
ATAF serves as an African network that aims at improving tax systems in Africa through exchanges, knowledge dissemination, capacity development and active contribution to the regional and global tax agenda.
The focus is that improved tax systems will increase accountability of the State to its citizens, enhance domestic resource mobilisation and thereby foster inclusive economic growth. Malawi Revenue Authority is one of the continental body’s 38 members.
Established in 2009, this year ATAF is celebrating its 10th Anniversary and through the conference in Kigali, the Rwanda Revenue Authority has officially initiated the commemorations. November will mark the climax of the anniversary celebrations which will take place in Uganda.
BY HENRY MCHAZIME