And so finally Malawi has its first modern mine – the Kayelekera Uranium Mining http://www.google.com/hostednews/afp/article/ALeqM5iYW-oAsY10hHQQwmPtgVvevUGxaw.
Bingu is reported to have said: "We have entered a new era of economic development and transformation" . The mine will contribute to the country’s forex earnings, government tax revenue and direct employment in the Karonga district. As such this entry by Malawi into the world of mining. It will also increase the domestic market for other producers. There are signs that other major mining projects are in the pipeline.
It is said one reason that Malawi has taken so long before embarking on serious mining wasDr. Banda’s aversion to mining. Apparently Dr. Banda had noticed that Ivory Coast with no mining was economically doing better than Ghana with its legendary gold mining. From this he drew the conclusion that Malawi would focus on agriculture.
Mining a is a double edged sword and this blessing can easily turn into a curse. In the worst case it can negatively affect other export sectors through strengthening of the Kwacha. This has been called as the “Dutch Disease” after the negative effects on other export activities of the discovery by the Netherlands of natural gas. However this “disease” can be overcome by using the earnings to enhance the productivity of other sectors by, for example funding the formation of human capital (education, health etc) and the building of infrastructure and enhancing the productivety of our agriculture. If, on the other hand, the “easy” revenue accruing to the state goes to pharaonic projects and wasteful consumption or simply fuels corruption then the Dutch disease will hit us hard . There are also other political economy effects to consider – the distribution of the revenue along class and geographical lines. Generally mining economies in Africa have the worst income distribution. This will be the subject of another blog. Watch this hole!
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