Government Must Act Transparently: Publish the Mining Deal With Lotus Resources Immediately! - Rev. Maulidi

The Malawian government’s covert management of the Mining Development Agreement (MDA) with the Australian company Lotus Resources Limited is highly questionable. Reverend Baxton Maulidi, who leads economic justice initiatives for the AACC in Malawi, is calling for urgent transparency regarding this pact. He aims to avoid a repeat of past issues involving harmful and exploitative tax breaks that were detrimental when Paladin Africa was involved.

Reverend Maulidi, serving additionally as the Deputy General Secretary for the Church of Central Africa Presbyterian (CCAP) Blantyre Synod, did not hold back in criticizing the government’s lack of transparency. He pointed out to officials that the Paladin Africa agreement from 2009 had significant issues—issues thoroughly uncovered by ActionAid Malawi in 2015 but seemingly disregarded by current leadership.

A Government Unwilling to Learn?

"The fact that the present government openly ignored ActionAid Malawi's clear suggestions to subject mining agreements to public and parliamentary review before signing them is astonishing," Rev. Maulidi questioned. "Why was the deal with Lotus Resources conducted covertly? Moreover, since it has been finalized, what is the reason for keeping it concealed from the general populace?" he demanded.

The ActionAid Malawi report exposed a concerning trend of distorted tax benefits involving Paladin Africa. The company managed to secure extremely reduced tax rates and numerous exemptions, resulting in significant funds being diverted away from Malawi’s treasury. Known as the ‘royalty rate’—a single fee charged for uranium extraction—the amount was drastically cut down from the usual 5% of sales to merely 1.5% over the initial three-year period before rising slightly to 3%. This mismanagement led to an alarming fiscal deficit for Malawi, totaling approximately $15.6 million.

A Playbook of Exploitation

However, Paladin’s tax avoidance extended further. By taking advantage of the tax agreement between Malawi and the Netherlands, the firm channeled funds through a Dutch affiliate with no staff members, thereby evading withholding taxes on interest payments and service charges. Consequently, this led to an outrageous $27.5 million deficit over merely half a decade, escalating the overall harm caused to Malawi beyond $43 million.

Lotus Resources should not be permitted to repeat these tactics," cautioned Rev. Maulidi. "Yet another firm from Australia, yet another covert agreement—can we truly accept that this serves Malawi's interests?

The ambiguity around the Lotus Resources agreement grows even more questionable when examining the series of transactions preceding it. Paladin divested 65% of its holding in Kayelekera to Lily Resources, which subsequently disposed of its 20% share to Lotus Resources. The government retains only a small 15% interest—prompting significant doubts about who actually gains from this arrangement.

Malawi Needs Transparency and Accountability

Reverend Maulidi insists on complete transparency regarding the pact, aligning with ActionAid Malawi’s plea for all mining agreements and fiscal benefits to be openly disclosed and examined by experts, legislative bodies, and non-governmental organizations (NGOs).

ActionAid's recommendations were clear:

The government should not decrease royalty rates for international corporations as a tax incentive in the future.

We should prevent companies from using complex financial arrangements to reduce their tax liabilities.

The cost-benefit assessments of these accords should be disclosed publicly and regularly revised.

Annually, the government needs to reveal the income losses resulting from tax incentives.

This level of opacity and hasty decision-making has caught the attention of financial analysts. The chief economist at Don Consultancy Group, Chifipa Mhango, criticized the administration for conducting talks without adequate professional input. He emphasized that securing a mining agreement demands specialized sectoral insight, robust commercial skills, and awareness of international patterns. However, he pointed out that the discussions involved just the Minister of Finance, the Minister of Mines, and Attorney General Thabo Chakaka Nyirenda—“Where were the impartial specialists?” Mhango questioned.

Worse still, following the signing of the deal, the sole parties consulted were the traditional leaders in Karonga, headed by Paramount Chief Kyungu, who consented to a Community Development Agreement failing to reflect Malawi’s best interests at heart.

The People Demand Answers

The government needs to take action promptly. The citizens of Malawi won’t tolerate another extractive mining contract negotiated in secret. The accord with Lotus Resources should be made public without delay so it can be examined. Openness isn’t a luxury—it’s an entitlement!

Will the government respond to this appeal, or will it persist on the course of concealment, graft, and economic mischief? The country is observing.

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