Malawi’s gold plan faces a credibility test

A state-backed buying scheme aims to stem smuggling. But conflicting estimates, overlapping institutions and uncertain financing raise questions about whether the country can build a market that miners will trust

Malawi’s effort to bring artisanal gold into the economy faces a problem that a new network of buying centres cannot solve on its own: the state has yet to establish how much gold is being lost, how its agencies will work together and whether the proposed market can offer miners competitive prices.

The Malawi Mining Investment Company (Mamico) estimates that about $100 million (R1.7 billion) worth of gold leaves the country illegally each year. It estimates that artisanal miners operate at roughly 100 sites and plans to buy their gold at centres in Lilongwe, Kasungu and Nkhotakota before selling it to the Reserve Bank of Malawi (RBM).

The arrangement depends on an offtake agreement that has yet to be concluded.

The proposal comes as Malawi searches for exports that can help ease its persistent foreign-exchange shortage. Government policy aims to rebuild reserves to at least three months of import cover by diversifying exports and monetising minerals, including gold. In September, reserves stood at $600.6m, enough to cover 2.4 months of imports, below the government’s target.

There is a clear economic case for bringing gold into the market. It is portable, internationally priced and can be converted into the foreign exchange needed to pay for fuel, medicines and fertiliser. But this makes reliable evidence important. A national strategy cannot rest securely on a headline estimate whose methodology has not been made public.

The omission is significant. Earlier in 2026, Mamico reported that a month-long study had put annual losses at more than $700m and identified 81 illegal mining sites. The estimates differ sevenfold, while the reported number of sites has increased from 81 to about 100.

This does not prove either figure wrong. The studies might have used different definitions, prices or reporting periods. However, Mamico’s announcement does not explain the discrepancy. The scale of production, smuggling and lost public revenue therefore remains uncertain.

Nor is the market value of smuggled gold the same as the government’s fiscal loss. Only a portion of that value would ordinarily accrue to the state through taxes and royalties or enter the foreign-exchange market. Treating the full value as a national loss conflates distinct economic measures.

The wider data system offers little basis for precise estimates.

A 2025 World Bank diagnostic found that Malawi lacked an accredited laboratory to independently verify mineral quality and value. It also identified weaknesses in geological information, licensing oversight and institutional capacity. The shortcomings make hidden production harder to measure and declared exports more difficult to value consistently.

However, Mamico is waiting for the RBM to agree to buy its gold. Without the commitment, the pro-posed trading chain remains incomplete. A buying centre without assured funding and a competitive price is little more than a market stall without stock: visible, legal and unable to trade.

Mamico’s entry creates potential overlap in locations, banking part-ners and public mandates. The risk is that an attempt to address a failure in the informal market creates a coordination problem in the state.

The outcome is not inevitable. Multiple buyers could improve access and competition if their mandates, pricing formulas, assay standards, funding arrangements and reporting duties were aligned.

It is unclear whether Mamico will replace the EDF, buy gold alongside it or act as an aggregation agent within a central-bank programme.

Price also matters. Earlier reporting recorded complaints that official buyers offered lower prices than other buyers. No pricing formula or transaction data has been published. New centres may shorten the journey to market but they will not attract more gold if payments are delayed, assay results are disputed or miners receive a lower net price.

The legal framework is stronger on paper. The Mines and Minerals Act of 2023 established the independent Mining and Minerals Regulatory Authority, giving it powers to license mining, regulate mineral exports, conduct audits and impose sanctions. Gold is a reserved mineral and exports require a permit.

Implementation is the harder test. The World Bank has found that artisanal and small-scale mining remains largely informal and poorly supported, with limited access to finance, training and formal markets. It has also identified understaffed or underfunded agencies responsible for mining, taxation and environmental oversight.

Enforcement alone could push vulnerable miners further underground unless licensing, financing, technical support and transparent pricing change the incentives.

It also exposed a policy tension. Gold held as a reserve asset can strengthen a central bank’s balance sheet but gold sold to meet immediate liquidity needs cannot also serve as a long-term buffer.

Malawi’s earlier position was to refine locally purchased gold to monetary grade and hold it as reserves. The April sale reflected the pressure created by immediate import needs. For miners, a dependable buyer could mean documented sales, predictable payments and a route into licensed production. For the Treasury and the central bank, traceable purchases could improve royalty collection, export records and foreign-exchange repatriation.

Formal trade alone will not resolve unsafe working conditions, mercury exposure or environmental damage around informal mining sites. These concerns were also identified in the World Bank’s mining review.

Given gold’s high value relative to its weight, an underfunded buying scheme can quickly be undercut by traders with cash and established cross-border networks.

The stakes extend beyond smuggling

The World Bank projects that Malawi’s wider mineral sector could generate more than $30bn in exports between 2026 and 2040. However, it warns that regulatory capacity, infrastructure, skills and governance will determine whether this potential translates into public benefits.

The artisanal gold market is an early test of whether Malawi can measure its mineral wealth, coordinate its institutions and account for the value generated before much larger projects begin production.

Mamico’s centres might widen access to the legal market but opening them is not a measure of success. Figures on buying volumes, prices, payment times, assay results and operating costs — independently reconciled with export data — would show whether gold is moving from informal routes into the official market. Comparable disclosure would also allow Parliament and the public to assess the $100m estimate against production.

Ultimately, the credibility of Malawi’s gold strategy will depend on evidence and execution: whether Mamico publishes its methodology, the RBM establishes a coherent offtake system and the MMRA releases traceable production and export data.

Without these steps, the state risks building a new market around an old uncertainty.

Collins Mtika is a veteran journalist and the Mail & Guardian’s special correspondent in Mzuzu, Malawi. This article was made possible through a partnership with the Centre for Investigative Journalism Malawi — www.investigativemalawi.org.