Public Disclosure Authorized AFRICA Malawi Energy & Extractives Global Practice IBRD/IDA Investment Project Financing FY 2011 Seq No: 10 ARCHIVED on 05-Jan-2018 ISR28752 Implementing Agencies: Government of Malawi, Ministry Of Natural Resources Energy and Mining Public Disclosure Authorized Key Dates Key Project Dates Bank Approval Date:31-Mar-2011 Planned Mid Term Review Date:01-Dec-2014 Original Closing Date:30-Sep-2016 Project Development Objectives Effectiveness Date:23-Aug-2012 Actual Mid-Term Review Date:05-Dec-2014 Revised Closing Date:31-Mar-2018 Public Disclosure Authorized Project Development Objective (from Project Appraisal Document) To improve the efficiency, transparency and sustainability of mining sector management Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Managing Mineral Rights and Operations:(Cost $6.50 M) Generating and Managing Mineral Revenue:(Cost $1.55 M) Public Disclosure Authorized Promoting the Mining Sector:(Cost $17.00 M) Project Management:(Cost $2.72 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate 1/5/2018 Page 1 of 8
Implementation Status and Key Decisions The MGGSP has been effective since August 23, 2012, with a current disbursement rate of 82%. Overall project implementation is rated as Satisfactory. Implementation Progress: A Strategic Environmental and Social Action Plan was completed in 2015 and its Action Plan was adopted by Government in May, 2016. As a result, the Covenant to the Finance Agreement regarding the SESA has been met. The 1981 Mines and Minerals Act has been reviewed and the Bill and associated regulations have been finalized. The activity suffered a number of delays and is now expected to be tabled in the February 2018 seating of Parliament. Work is in progress to establish a modern computer-based cadastral system with efficient and transparent management of mineral exploration and mining rights. A contract has been awarded and implementation is in progress. Some of Malawi s mining licenses are already visible online. The amendments to the Income Tax Act were passed by parliament in June 2016 except for the VAT act. The Bank Team congratulates the EITI Multi Stakeholder Group (MSG) for progress made towards EITI validation. The group released the first report in April 2017 as planned. The MSG has prepared a Scoping Study to define the scope for the first Malawi Extractive Industries Transparency Initiative (MEITI) report and in preparation of the work of the Independent Administrator, who was assigned to do the reconciliation and write the report. This first year report focused on larger companies in order to minimize costs of running MEITI. MEITI funding has been covered by GIZ to date, including 3 Secretariat staff (a Technical Manager, Communications Officer and Accountant). Additional support is provided under Component B-3 (Building Mineral Revenue Transparency) of MGGSP, including capacity building, consultations and launch of the EITI in Malawi. The Bank team stresses that Malawi should integrate sustainability of the EITI into Government structures and the budget. Work on establishment of the Geo-Data Management Center is in progress. The geo-database will be located in the Geological Survey Department (GSD) library, which has been refurbished under the project. Several activities continue to take place to encourage investment in artisanal and small-scale mining (ASM) such as training, attendance at International ASM Indaba, Skills development, and formation of cooperatives. Other activities under this project include training the police, the Malawi Revenue Authority (MRA) and immigration officials in identification of gemstones. The ASM policy has been developed and is now awaiting approval by cabinet committee. Courses have been introduced at The Malawi Polytechnic and MUST in the mining related fields such as Mining Engineering and Geology. A curriculum review was also done at Chancellor College to ensure that the courses offered by these institutions meet the potential market demand for the skills in the mining sector. Procurement under the project has been rated as Satisfactory as many contracts have been signed, are being implemented and deliveries have been made for goods and services. Financial Management arrangements for the project have been rated Satisfactory and risk has been assessed as substantial. The project is now current on all IFRs as well as audited financial statements. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and Sustainability -- Substantial Substantial 1/5/2018 Page 2 of 8
Fiduciary -- Moderate Moderate Environment and Social -- Substantial Moderate Stakeholders -- Moderate Moderate Other -- -- -- Overall -- Moderate Moderate Results Project Development Objective Indicators PHINDPDOTBL Efficiency - Days taken to issue mineral rights (Number, Custom) 90.00 94.00 74.00 45.00 Date 23-Aug-2012 02-Jun-2016 10-Nov-2017 23-Aug-2017 PHINDPDOTBL Transparency - Annual public reporting of mineral sector tax revenues (Text, Custom) no Yes Yes yes Date 23-Aug-2012 02-Jun-2016 10-Nov-2017 30-Mar-2018 PHINDPDOTBL Sustainability - Percentage of mining operations subjected to environmental certification (Percentage, Custom) 50.00 100.00 100.00 90.00 Date 23-Aug-2012 02-Jun-2016 10-Nov-2017 30-Mar-2018 Comments Since project effectiveness Sustainability has been defined as number of companies subjected to Environmental Impact Assessment (EIA) certification. This indicator was clarified during the October 2016 World Bank surpervision mission as number of mining companies that are monitored for adherence of the mechanism set in the EIA document. As a follow up to the new clarification the Project engaged Environmental Affairs Department (EAD) which is mandated for routine monitoring to source the required data. It was noted that EAD is mandated to do routing monitoring quarterly and its across several sector apart from Mining. 1/5/2018 Page 3 of 8
Overall Comments Intermediate Results Indicators Modern mining legislation in place (Text, Custom) Mining Policy in place but new mining act and regulations, amended mineral taxation legislation and model mining agreement still under development The Mines and Minerals Act has been reviewed and the Bill and associated regulations have been finalized. The activity suffered a number of delays and is now expected to be tabled in the February 2016 seating of Parliament. The Mines and Minerals Act has been reviewed and the Bill and associated regulations have been finalized. The activity suffered a number of delays and is now expected to be tabled in the February 2018 seating of Parliament. New mining regulations submitted to relevant authorities. Date 23-Aug-2012 06-Dec-2016 10-Nov-2017 30-Mar-2018 Modern computerized mining cadastre in use (Text, Custom) Minerals licensing conducted using slow and paper based system A contract has been awarded and the Consultants have already started implementation. Some of Malawi s mining licenses are already visible online. Building refurbishment works have commenced. New cadaster office is about to be completed. Regulations for transitioning from previous manual to computerized cadaster are being drafting, including regulations for the mining cadaster committee meetings.commenced. Computerized cadastre in use Date 23-Aug-2012 05-Dec-2016 10-Nov-2017 30-Mar-2018 1/5/2018 Page 4 of 8
Multi-stakeholder forum on mining sector established with civil society participation (Text, Custom) Ad hoc and reactive arrangements for stakeholder dialogue The EITI Multi Stakeholder Group (MSG) has made progress towards EITI validation. The group is on track to release the first report by April 2017.The MSG continues to meet on a quarterly basis. The EITI Multi Stakeholder Group released and disseminated the first report in April 2017.The MSG continues to meet on a quarterly basis. Regular meetings of multistakeholder forum taking place Date 23-Aug-2012 06-Dec-2016 10-Nov-2017 30-Mar-2018 Health, safety, environmental and social management policies and monitoring systems completed (Text, Custom) Gaps exist in policy framework and monitoring systems are in need of significant strengthening The Policy Framework for Safety, environmental and social management has is in place. New tools for implementing the Policy Framework and monitoring systems are being drafted. Policy framework complete and monitoring system in place Date 23-Aug-2012 06-Dec-2016 10-Nov-2017 30-Mar-2018 Standardized fiscal regime (Text, Custom) Royalty and tax terms open to negotiation and selective concession Standardized royalty and tax laws and regulations drafted. Target Achieved. Standardized royalty and tax laws and regulations drafted. Target Achieved. Standardized royalty and tax laws and regulations drafted Date 23-Aug-2012 02-Jun-2016 10-Nov-2017 30-Mar-2018 1/5/2018 Page 5 of 8
Mineral tax administration and revenue management developed (Text, Custom) No specialized arrangements for minerals tax administration and revenue management The tabling in parliament has delayed. The next session of parliament now is February 2017. The Ministry of Justice is incorporation EITI issues. The cabinet has finally finalized the draft bill and will be sent to the parliament. The next session of parliament now is February 2018 Policies to address revenue volatility and savings introduced Date 23-Aug-2012 06-Dec-2016 10-Nov-2017 30-Mar-2018 Geo-data management center providing online access (Text, Custom) Only old and insufficient geo-data available The Consultant, GAFAG has made initial deliverables: training of officers and presentation of a prototype system. The geo-database will be located in the GSD library, which has been refurbished under the project. The Geo- data management Centre is now in operation and accessible online. Digitization of old information is ongoing. Geo-data management centre in operation and accessible online Date 30-Aug-2012 02-Jun-2016 10-Nov-2017 30-Mar-2018 Number of students newly enrolled in mining-related tertiary education programs in Malawi (with breakdown by gender) (Number, Custom) 42.00 262.00 262.00 150.00 Date 31-Dec-2010 02-Jun-2016 10-Nov-2017 30-Mar-2018 1/5/2018 Page 6 of 8
Number of public service personnel trained in sector-relevant fields (with breakdown by gender) (Number, Custom) 0.00 199.00 199.00 115.00 Date 23-Aug-2012 02-Jun-2016 10-Nov-2017 30-Mar-2018 Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P120825 IDA-49010 Effective USD 25.00 25.00 0.00 21.61 1.70 93% P120825 TF-12935 Closed USD 4.67 4.67 0.00 4.06 0.71 85% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P120825 IDA-49010 Effective 31-Mar-2011 02-Nov-2011 23-Aug-2012 30-Sep-2016 31-Mar-2018 P120825 TF-12935 Closed 13-Aug-2012 22-Aug-2012 23-Aug-2012 17-Nov-2015 15-Dec-2017 Cumulative Disbursements 1/5/2018 Page 7 of 8
Restructuring History Level Approved on 04-May-2012,Level 2 Approved on 11-May-2016,Level 2 Approved on 03-May-2017,Level 2 Approved on 17-Aug-2017,Level 2 Approved on 10-Oct-2017 Related Project(s) There are no related projects. 1/5/2018 Page 8 of 8