Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 59847-MW

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 16.1 MILLION

(US$ 25 MILLION EQUIVALENT)

TO THE

REPUBLIC OF MALAWI

FOR A

MINING GOVERNANCE AND GROWTH SUPPORT PROJECT

MARCH 7, 2011

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective February 23, 2011)

Currency Unit = Malawi Kwacha 149.98 MWK = US$1

US$1.55 = SDR 1

FISCAL YEAR July 1 – June 30

ABBREVIATIONS AND ACRONYMS

ASM CAS CSO DA EAD EIA EMSWG FM GSD IDA IFR JICA M&E MGDS MGGSP MNREE MoF MRA MSR ORAF PDO PIM PMT

Artisanal and Small Scale Mining Country Assistance Strategy Civil Society Organizations Designated Account Environmental Affairs Department Environmental Impact Assessment Energy and Mining Sector Working Group Financial Management Geological Survey Department International Development Association Interim Financial Report Japanese International Cooperation Agency Monitoring and Evaluation Malawi Growth and Development Strategy Mining Governance and Growth Support Project Ministry of Natural Resources, Energy and Environment Ministry of Finance Malawi Revenue Authority Mineral Sector Review Operational Risk Assessment Framework Project Development Objective Project Implementation Manual Project Management Team

PPP PSC SESA

Private-Public Partnership Project Steering Committee Strategic Environmental and Social Assessment

SOE Statement of Expenditure

Regional Vice President: Obiageli Katryn Ezekwesili Country Director: Olivier Godron, Acting

Sector Director: Sector Manager:

Jose Luis Irigoyen Paulo de Sa

Task Team Leader: Bryan Land

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TABLE OF CONTENTS I. Strategic Context ................................................................................................................. 1

A. Country Context .................................................................................................................. 1

B. Sectoral and Institutional Context ....................................................................................... 2

C. Higher Level Objectives to which the Project Contributes ................................................ 4

II. Project Development Objectives ........................................................................................ 4 A. PDO..................................................................................................................................... 4

1. Project Beneficiaries ..................................................................................................... 5

2. PDO Level Results Indicators ...................................................................................... 5

III. Project Description ............................................................................................................. 5 A. Project components ............................................................................................................. 5

B. Project Financing ................................................................................................................ 7

1. Lending Instrument....................................................................................................... 7

2. Project Cost and Financing ........................................................................................... 8

C. Lessons Learned and Reflected in the Project Design ........................................................ 8

IV. Implementation ................................................................................................................... 9 A. Institutional and Implementation Arrangements ................................................................ 9

B. Results Monitoring and Evaluation .................................................................................. 11

C. Sustainability..................................................................................................................... 12

V. Key Risks and Mitigation Measures ................................................................................. 12 VI. Appraisal Summary .......................................................................................................... 12

A. Economic and Financial Analysis ..................................................................................... 12

B. Technical ........................................................................................................................... 13

C. Financial Management ...................................................................................................... 13

D. Procurement ...................................................................................................................... 13

E. Social (including safeguards) ............................................................................................ 13

F. Environment (including safeguards) ................................................................................. 14

Annex 1: Results Framework and Monitoring ............................................................................. 16 Annex 2: Detailed Project Description ......................................................................................... 20 Annex 3: Implementation Arrangements ..................................................................................... 36 Annex 4: Operational Risk Assessment Framework (ORAF) ...................................................... 53 Annex 5: Implementation Support Plan........................................................................................ 58 Annex 6: Team Composition ........................................................................................................ 60

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TABLES Table 1: Project Cost and Financing ............................................................................................... 8 Table 2: Project Planning and Reporting Documents ................................................................... 11 Table 3: Project Management Team ............................................................................................. 37 Table 4: Disbursement Categories ................................................................................................ 42 Table 5: Project Planning and Reporting Documents ................................................................... 51

FIGURE Figure 1: Project Implementation Arrangements .......................................................................... 10 Figure 2: Project Co-financing Arrangements .............................................................................. 52

BOXES Box 1: The Extractive Industries Value Chain Approach (EITI++) ............................................... 9 Box 2: Mining Law Reform .......................................................................................................... 21 Box 3: Costs of Modernizing a Mining Cadastre ......................................................................... 23 Box 4: SESA Objectives ............................................................................................................... 25 Box 5: Mineral Revenue Sharing .................................................................................................. 28 Box 6: The benefits and costs of geo-data acquisition through airborne geophysical surveys .... 31 Box 7: Main steps of the SESA .................................................................................................... 48 Box 8: Stakeholder engagement during the SESA ....................................................................... 49

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PAD DATA SHEET

REPUBLIC OF MALAWI

Mining Governance and Growth Support Project

PROJECT APPRAISAL DOCUMENT

AFRICA REGION SEGOM

Date: March 7, 2011

Country Director: Olivier Godron, Acting Sector Director: Jose Luis Irigoyen Sector Manager: Paulo de Sa Team Leader(s): Bryan Land Project ID: P120825 Lending Instrument: Specific Investment Lending

Sector(s): Mining and Other Extractives Theme(s): Other environment and natural resources management EA Category: B Partial Assessment

Project Financing Data: Proposed terms:

[ ] Loan [X ] Credit [ ] Grant [ ] Guarantee [ ] Other:

Source Total Amount (US$M) Total Project Cost:

Cofinancing: Borrower: Total Bank Financing:

IBRD IDA

New Recommitted

30.66 5.66 (Euro 4.1) 0 25 -- 25

Borrower: Republic of Malawi

Responsible Agency: Ministry of Natural Resources, Energy and Environment

Contact Person: Randson Mwadiwa, Principal Secretary Telephone No.: 01 789 488 Fax No.: 01 788 689 Email: malawimininggrowth@gmail.com

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Estimated Disbursements (Bank FY/US$ m)

FY 2012 2013 2014 2015 2016 2017 Total

Annual 7.29 6.82 7.62 4.07 3.04 1.18 30.02

Cumulative 7.29 14.11 21.73 25.79 28.84 30.02 30.66 (with front end fee and exchange rate contingency)

Project Implementation Period: 5 years Expected effectiveness date: August 31, 2011 Expected closing date: September 30, 2016

Does the project depart from the CAS in content or other significant respects?

○ Yes X No

If yes, please explain:

Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate by Bank management? Is approval for any policy exception sought from the Board?

○ Yes X No ○ Yes ○ No ○ Yes X No

If yes, please explain:

Does the project meet the Regional criteria for readiness for implementation?

X Yes ○ No

No policy exceptions are requested If no, please explain:

Project Development Objective: To improve the efficiency, transparency and sustainability of mining sector management.

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Project description Component A: Managing Mineral Rights and Operations. Activities to support the Government build an efficient, transparent and environmentally and socially sustainable framework for managing mineral rights and operations. Component B: Generating and Managing Mineral Revenue. Activities to support the Government develop transparent arrangements for optimal generation and use of mineral revenues. Component C: Promoting the Mining Sector. Activities to support the Government improve the enabling environment for mining sector development by acquiring and disseminating geo-data, foster more sustainable artisanal and small scale mining, increase the supply of Malawians trained at tertiary level in minerals and improve the policy environment for mining-related infrastructure development. Component D: Project Management. Support at implementation to the Ministry of Natural Resources, Energy and Environment to undertake project management, in accordance with the Bank’s fiduciary and other guidelines. Project preparation is being supported by a Project Preparation Advance of US$500,000.

Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

X Yes ○ No ○ Yes X No ○ Yes X No ○ Yes X No ○ Yes X No ○ Yes X No ○ Yes X No ○ Yes X No ○ Yes X No ○ Yes X No

Conditions and Legal Covenants:

Financing Agreement Reference

Description of Condition/Covenant Date Due

5.01

EFFECTIVENESS CONDITIONS

The Additional Conditions of Effectiveness consist of the following:

(a) The Recipient has adopted a Project Implementation Manual.

(b) The Recipient has adopted a mining policy in form and substance satisfactory to the Association.

(c) The EU Grant Agreement has been executed and delivered and all

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Sch 2- Sec I.E.1

conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it have been fulfilled

DATED COVENENTS

(a) The Recipient shall, not later than 18 months after the Effective Date, carry out a strategic environmental and social assessment of the Recipient’s mining sector under terms of reference satisfactory to the Association (“SESA”), and on the basis of said assessment, the Recipient shall: (i) prepare and disclose an action plan that, inter alia, identifies such regulatory instruments, agreed with the Association (“Action Plan”), as may be necessary for the environmentally and socially sustainable management of the Recipient’s mining sector; and (ii) adopt such Action Plan not later than 6 months after the completion of the SESA.

(b) The Recipient shall ensure that the Project Reports include adequate information on the status of preparation and implementation of the regulatory instruments referred to in paragraph a above.

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I. Strategic Context

A. Country Context 1. Malawi has experienced an improvement in its economic fortunes after years of stagnation but remains one of the ten poorest countries in the world (GDP per capita of US$265, 2008) and is lagging in many indicators of social welfare (160 of 182 countries in UN Human Development Index, 2009). There have now been several years of consistent high GDP growth and declining inflation, prompted by prudent macro-economic management, debt relief after reaching the HIPC completion point in 2006 and bumper crops of its main agricultural produce. This has been accompanied by other signs of robust economic performance, with lending to the private sector and tax receipts both growing. Nonetheless, these economic gains remain vulnerable, with economic wellbeing overly dependent on rain-fed subsistence farming, publicly funded services supported by donors, traditional exports of tobacco, tea and sugar, and high cost imports of fuel and essential goods.

2. Sustained export-led growth requires the strengthening and diversification of productive sectors, including mining, the removal of binding infrastructural constraints and a supportive exchange rate management policy. The Country Economic Memorandum placed special emphasis on the need for public investment to improve energy supply and reliability and strengthen transport and trade facilitation. Mining development has the potential to contribute to alleviation of infrastructure challenges, since its requirement for reliable and cost-effective transport and energy on a long-term basis can underpin public investment choices. Moreover, Malawi’s location as a potential transit route for the increasing volume of minerals being produced regionally, particularly in Tete Province of Mozambique and in Zambia, offers further potential for significant infrastructure investment. Mineral exports can, unless accommodated by appropriate exchange rate management policies, put upward pressure on the currency, which can diminish the competitiveness of non-mineral exports.

3. Government development strategies in the mid-2000s had established a long term goal of “increasing the contribution of the mineral sector to GDP by at least 10 percent annually” from a base of less than 2 percent of GDP. This optimism was founded on assessments by the Ministry of Natural Resources, Energy and Environment (MNREE) that showed the existence of a favorable geological setting for a range of valuable mineral types. The full extent of Malawi’s mineralization can only be revealed by further geological data acquisition and mineral exploration, however, several mineral deposits that have already been partly or fully evaluated could, under the right conditions, attract investment from the private sector in the nearer term.1

4. In 2009 Malawi’s first significant mine, Paladin’s Keyelekera uranium mine in northern region, came on stream and there is a pipeline of further investments to spur mineral sector growth. The World Bank’s Mineral Sector Review, July 2009 (MSR) projected the value of

Particular interest is being shown in Malawi as a potential supplier of minerals with increasing strategic value, including uranium and rare earth minerals.

1 Only limited new geological data has been acquired since the 1980s yet known mineralization includes deposits of bauxite, heavy mineral sands, rare earths, niobium, tantalite, copper, nickel, iron ore, gold, gemstones, various industrial minerals, and for energy production - uranium and bituminous and sub-bituminous coals.

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minerals output reaching some US $250 million within three years, with potential to double that after ten years, provided binding constraints mentioned above can be removed. Minerals would become one of the main sources of FDI, provide up to 25 percent of export earnings and account for some 5-6 percent of projected GDP. Progress by Globe Metals and Mining in developing the Kanyika niobium mine and other positive exploration results, coupled with the generally strong mineral price environment, provides continuing support for this assessment.

B. Sectoral and Institutional Context 5. The World Bank’s engagement on mining in Malawi started in 2007 with support to the Government in identifying key issues to be addressed in reforming the framework for managing mineral resources and developing a national mining policy. The World Bank prepared the MSR for this purpose. The MSR provides an assessment of mineral potential and provides recommendations on policy, legal, regulatory and institutional reforms to support growth and good governance of the mining sector. It also incorporates a rapid environmental and social assessment for the mining sector, which focuses on sector-wide mitigation of impacts of mining activities and the generation of tangible economic and social benefits in mining areas.

6. The National Mines and Minerals Policy was approved by the Cabinet Committee on Natural Resources on January 20, 2011 paving the way for full Cabinet review. It results from consultations conducted over several years with a wide range of stakeholders, including the stakeholder workshop of March 2009 in which the draft policy and the World Bank’s MSR were discussed together. The policy sets overarching objectives for the management of the mining sector, drawing on the SADC Mining Protocol2

7. Other donors are showing growing interest in supporting the Government’s mining sector reform program. DfID has already funded the work of a consultant to assist MNREE develop the new mining law, NGO outreach activities and previously supported the British Geological Survey to conduct mineral assessments on behalf of the Geological Survey Division (GSD). The IMF is providing ongoing technical advice on mining tax policy in close collaboration with the World Bank team. The EU will co-fund the MGGSP based on its grant under the 10th

EDF. The Government of France has undertaken to support MNREE promote mineral exploration under an aid-for-debt agreement with the Government signed in January 2011, details of which are still to be confirmed

and AU Mining Vision 2050. Sound management of the fast emerging mining sector in accordance with these principles will require a sustained program of reforms, which the proposed project is designed to support. MNREE has already prepared the draft of a new mining law that will replace and repeal the outdated Mines and Minerals Act of 1981, which it proposes to submit for Cabinet endorsement in 2011 before seeking Parliamentary approval.

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2 Within the sub-region, Malawi is party to the SADC Mining Protocol which seeks to improve competitiveness and governance of the mining sector of members by concerted and harmonized reforms. The National Mining Policy has been benchmarked against the Mining Protocol and aligned with the SADC Mining Harmonization Framework, whose implementation plan was endorsed by SADC mining ministers in Kinshasa in November 2009.

. The Japanese International Cooperation Agency is also reviewing possible support to MNREE on geological data management. MNREE convened a meeting in January 2011 to coordinate donor support. The World Bank-EU Project was acknowledged to be the

3 The main focus of the program will be geological field mapping, a very complementary activity to the World Bank-EU project, see Annex 3 “role of partners”.

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most advanced and comprehensive of the projects and, therefore, other programs should complement it.

8. In 2010 the Government decided to encourage the formation of Sector Working Groups as a platform for sector-wide policy dialog in consultation with stakeholders, including the private sector and donors. Mining is covered by the Energy and Mining Sector Working Group (EMSWG) and is chaired by MNREE through the Principal Secretary. The mandate of the SWG allows it to provide high-level stakeholder consultation and input into key policy reform programs, such as the one taking place in the mining sector, and to facilitate coordination of the support provided by donors for such reforms.

9. The growth of the mineral sector on a sustainable basis from its present relatively low base is not assured. The key strategic challenges for Malawi are the same as those faced across the continent, which the African Union’s (AU’s) Africa Mining Vision 2050 is designed to address, namely:

• Overcoming the fact that Africa’s geology remains largely unexplored due to insufficient investment in mineral exploration and development compared to other parts of the world.

• Harmonizing institutional, policy, and regulatory frameworks to present a more even playing field for investors and avert a “race to the bottom” in a bid to induce investment.

• Ensuring that resource rents are shared fairly and managed wisely for the benefit of the present and future generations.

• Strengthening the human resource base across the region to take advantage of opportunities for skilled employment and develop technical expertise in managing all aspects of the mineral sector.

• Establishing and better enforcing environmental, social, health, and safety standards in the mining industry which will have domestic as well as regional benefits.

• Providing reliable infrastructure to support exploration and exploitation of mineral resources.

• Encouraging greater backward and forward linkages so that mining ceases to take place on an enclave basis and can better contribute to local economic and social development.

• Fostering more sustainable and less environmentally and socially harmful artisanal and small scale mining activities.

10. A number of Malawi’s neighbors have made progress in addressing the above-mentioned challenges. In most cases, this has required sustained and, in some cases, deep reforms to

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become attractive destinations for minerals investment. Following a generation of mineral sector reforms, Mozambique, Madagascar and Tanzania are examples of countries previously not noted for mining, which are emerging as significant producers and increasingly focusing attention on securing wider economic benefits of mining sector growth.

11. It is recognized that the wider benefits of mining cannot be achieved without good governance of the sector. Clear regulatory mandates and strong institutions are needed which operate in a transparent way, and are accountable to stakeholders. Successful reform will minimize the diversion of resource rent along the extractive industries value chain, ensure that rent contributes to sustainable development and cater for the economic and social needs of communities where mining takes place. The World Bank’s approach to policy advice and technical assistance in the mining sector is guided by this vision (known as “EITI++” – see also Lessons Learned).

12. In Malawi’s case, the considerable interest that has been generated in minerals following the start of the Keyelekera mine could result in a situation in which investment flows at a pace that overwhelms the government’s ability to manage such investment wisely, eventually undermining wider governance in the country and failing to contribute to sustainable development. That is the risk that the proposed project, inter alia, seeks to address.

C. Higher Level Objectives to which the Project Contributes 13. A broad strategy for mining to contribute to economic diversification and development formed part of the Malawi Growth and Development Strategy (2006-2010). The President, upon re-election in 2009, declared that mining should be “a priority among priorities”, to be reflected in the successor to the MGDS, which will cover the period 2011-2016. 14. The proposed project is consistent with the Country Assistance Strategy 2007-2010, in its support for private sector development and improved public sector management, and will contribute to attaining the goals of the proposed 2012-2015 Country Assistance Strategy under the themes of Promoting Sustainable, Diversified, and Inclusive Growth and Improving Governance. Mining sector governance and growth indicators form part of the draft CAS Results Framework.

II. Project Development Objectives

A. PDO

15. The Project Development Objective is to improve the efficiency, transparency and sustainability of mining sector management. This should help the Government to improve sector governance and create an enabling environment for mining. The project is consistent with the national objective, which stretches beyond the scope and timeline of this project, of increasing the contribution of mining to sustainable growth and development.

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1. Project Beneficiaries 16. The beneficiaries will be (i) Malawians at large through positive contributions made by mining to sustainable growth and development, (ii) the private sector through the improvements in the investment climate and infrastructure provision catalyzed by mining sector investment, (iii) mining companies that will benefit from improved availability of geo-data for making exploration decisions, an improved environment for acquiring and maintaining mineral rights and an increased supply of qualified Malawians, (iv) mining-affected communities who will benefit from arrangements to provide social infrastructure and local economic opportunities and measures to reduce, mitigate and compensate for mining related risks and (v) government institutions and their staff involved in managing the mineral sector who will benefit from a modernized legislative framework for managing the sector and institutional capacity building.

2. PDO Level Results Indicators 17. The PDO Level Results Indicators for the Project are (i) efficiency: a reduction in the days needed on average to issue mineral rights; (ii) transparency: annual public reporting of mineral sector tax revenues; (iii) sustainability: an increase in the percentage of mining operations subjected to environmental certification.

III. Project Description

A. Project components 18. The Project will provide sector-specific technical assistance over five years, considering limits to the absorptive capacity of beneficiaries and the time needed for capacity building programs to be delivered. 19. The project design comprises activities to be implemented under three components plus project implementation, as a fourth component (see Annex 2 for detailed description and costs).

A. Managing Mineral Rights and Operations.The objective of this project component is to support the Government to build an efficient, transparent and environmentally and socially sustainable framework for managing mineral rights and operations. To achieve this, the project will support the following:

Indicative Cost US$6,500,000.

• A-1 Public Communications, Outreach and Stakeholder Dialogue by setting up the

structure and support arrangements for continuous and formalized dialogue among stakeholders on mining policy issues and oversight of policy implementation, as well as design of MNREE’s communications and outreach functions.

• A-2 Reforming Minerals Legislation by preparing drafting instructions for the new mining law and developing a body of regulations to give effect to it, covering mineral licensing, monitoring and inspection functions, health, safety and environmental standards, and a model Mining Development Agreement.

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• A-3 Modernizing Minerals Licensing by establishing a modern computer-based cadastral system and administrative arrangements for the efficient and transparent allocation and management of mineral exploration and mining rights by MNREE.

• A-4 Strengthening Mineral Operations Supervision by building capacity of MNREE for regular monitoring and inspections of exploration, mining and mineral processing operations using appropriate equipment.

• A-5 Strengthening Environmental and Social Management of Mining by establishing a comprehensive environmental and social management framework and robust monitoring systems at central, district and community levels.

B. Generating and Managing Mineral Revenues. Indicative Cost US$1,550,000 The objective of this project component is to support the Government to develop transparent arrangements for optimal generation and use of mineral revenues. To achieve this, the project will support the following:

• B-1: Reforming the Mineral Royalty and Tax Regime by completing the establishment

of a coherent, standardized and globally competitive fiscal regime for mining through design and implementation of suitable royalty and tax regulations.

• B-2: Maximizing Mineral Revenue Collection by building capacity in royalty and tax administration.

• B-3: Building Mineral Revenue Transparency so that revenue collection arrangements can be subjected to scrutiny and assurances given to the public that revenues are being properly accounted for.

• B-4: Developing Mineral Revenue Forecasting as part of the Government’s annual budget preparation cycle and medium-term macro-economic planning.

• B-5: Developing Mineral Revenue Management Policies to deal with potentially large and volatile mineral revenue flows and determine allocations made from funds collected.

C. Promoting the Mining Sector. Indicative Cost US$17,000,000

The objective of this project component is to support the Government to improve the enabling environment for mining sector development by acquiring and disseminating geo-data, fostering more sustainable artisanal and small scale mining, increasing the supply of Malawians trained at tertiary level in mining-related disciplines and improving the policy environment for mining-related infrastructure development. To achieve this, the project will support the following:

• C-1 Program of Geo-data Acquisition, Interpretation and Promotion, including a

comprehensive country-wide airborne geo-physical survey to acquire new data, interpretation studies and resource assessments to identify promising mineral opportunities and activities to promote investor interest.

• C-2 Establishing a Geo-Data Management Center to digitize, store and increase on-line access to geo-data.

• C-3 Program of Training and Awareness Raising for Artisanal Mining to gradually improve ASM practices and institutional support to the ASM sub-sector.

• C-4 Building Capacity for Tertiary Education in Mining to increase the supply of Malawians qualified at tertiary level in mining-related disciplines in order to help build

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the regulatory capacity of government institutions and to alleviate the chronic skills shortage faced by a fast growing mineral sector.

• C-5 PPP Framework for Mining-related Infrastructure to assist the Government to roll-out the Public Private Partnership (PPP) framework to the mining sector, through support to MNREE in tailoring the framework to mining-related infrastructure development and building requisite expertise.

D. Project Management. Indicative Cost US$2,700,000. This component will provide support at implementation to MNREE to undertake project management, in accordance with the Bank’s fiduciary and other guidelines, including incremental operating costs, equipment, training on fiduciary and project management issues, project audits and engagement of technical advisers to provide technical expertise on project performance monitoring and planning.

20. Project preparation is being supported by a Project Preparation Advance of US$500,0004

, to be re-financed at project effectiveness. It is funding consultancies to undertake diagnostic and needs assessments as a basis of project design, the preparation of the SESA TOR and specifications for major project procurements, support to prepare the Project Implementation Manual, the first Procurement Plan and the first Annual Work Plan and Budget, training for MNREE personnel who will comprise the Project Management Team and support for meetings and activities of the Government’s Project Steering Committee and Project Preparation Taskforce (see section IV Implementation). Provision is made in the financing for US$1.75 million of physical and price contingencies. In addition there is a provision for exchange rate contingency arising from the EU co-financing denominated in Euros (see Table 1 below).

B. Project Financing

1. Lending Instrument 21. The Project is proposed to be funded by an IDA credit of US$25 million. This instrument was chosen because of the strong capacity building element required to achieve project objectives and the financial benefits that would accrue to the Government, in terms of mining’s contribution to the economy, if the project is implemented successfully. 22. Arrangements for the co-financing of the Project by the European Union are in the process of being finalized. A grant of Euro 4.1 million to support mining sector development forms part of the 10th EDF allocation, under an agreement with the Government to be signed in March 2011 (10th EDF Regional Integration, Trade & Investment CSP). This co-financing will be administered by the World Bank according to the terms of an Administrative Agreement, through a dedicated Trust Fund that is under negotiation. The EU Grant Agreement5

with the Government will be signed prior to effectiveness of the IDA Credit.

4 PPA No. Q7350 August 12, 2010 5 EU Grant Agreement means the agreement to be entered into between the Government and the World Bank (IDA), acting as trustee of the co-financier providing for the EU grant.

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2. Project Cost and Financing

Table 1: Project Cost and Financing

Project Components

Project cost (US$ mn)

IDA Financing (US$ mn)

% Financing

EDF Grant

(US$ mn) A. Managing Mineral Rights and Operations B. Generating and Managing Mineral Revenues C. Promoting the Mineral Sector D. Project Management Project Preparation Advance Total Baseline Costs Physical and Price contingencies Total Project Costs Exchange Rate Contingency Front-End Fees Total Financing Required

6.50 1.55

17.00 2.72 0.50

28.27 1.75

30.02 0.32 0.32

30.66

5.40 1.29

14.11 2.25 0.50

23.55 1.45

25.00 0.00 0.00

25.00

82% 82% 82% 82%

100%

83% 82%

83% 0% 0%

82%

1.11 0.26 2.89 0.46 0.00

4.72 0.30

5.02 0.32 0.32 5.66

C. Lessons Learned and Reflected in the Project Design

23. The Project builds on experience gained from similar mining sector technical assistance operations in many countries, especially in Africa. This includes countries with long traditions of industrial mining like DRC, Zambia and Mauritania, and countries where mining has only recently emerged like Madagascar, Mozambique and Tanzania. Lessons learned are regularly captured in SEGOM analytical work and publications. Recent examples include technical papers on mining cadastres and guidelines for community development agreements in mining areas (see www.worldbank.org/mining). 24. Lessons learned on issues of revenue transparency, and the Bank’s experience in supporting Governments to implement the Extractive Industries Transparency Initiative in some 30 countries, in particular, will be taken into account when assessing the scope for its adoption in Malawi, as reflected in the design of Component B-3 on mineral revenue transparency.

25. The EITI++ approach used in the Bank’s current programs on extractive industries (see Box 1) has been instrumental in highlighting the critical need to integrate interventions aimed at improving mining sector performance with those related to the management of resource rents generated by the sector. This approach is strongly reflected in the PDO and Project design. 26. Project implementation experience has demonstrated that Government ownership is crucial at the policy and project design level for successful outcomes. The Bank has maintained an active dialogue with Government over the past three years on preparation of the MSR, as well as on preparation of the National Mines and Minerals Policy. For this Project, the Government’s strong ownership and commitment has been evident in consultations with all key ministries (MNREE, MoF, MoEd), regulatory agencies and revenue authorities. The team has also engaged in and supported Government consultation with the private sector and civil society. Consultations were designed to ensure that the project is fully in line with the Government’s development goals and vision, and responds to the expectations of the private sector and civil society.

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IV. Implementation

A. Institutional and Implementation Arrangements 27. Specific oversight of project implementation will come from the Project Steering Committee chaired by the Principal Secretary, MNREE. Other members of the PSC are, from MNREE, the Director of Finance and Administration, Director of Geological Surveys, Director of Mines, Director of Environmental Affairs, Director of Forestry, Controller of Policy Planning, Controller of Accounting Services, Controller of Human Resources and Commissioner of Mines, and the Secretary to the Treasury, Commissioner General for Malawi Revenue Authority, Secretary for Education, Science and Technology and Secretary for Development Planning and Cooperation.

28. The PSC had its inaugural meeting on December 20, 2010 and its second meeting on January 21, 2011 to review the PAD prior to Appraisal. The PSC will provide high level guidance on the implementation of the project and general policy guidance, approve work plans

Box 1: The Extractive Industries Value Chain Approach (EITI++)

In many resource-rich countries, the Extractive Industries Transparency Initiative (EITI) is an important entry point to the sound management of the oil, gas, and mining sector. With its focus on verification and publication of company payments and government revenues from the extractive industries, EITI demonstrates how voluntary global standards can help create incentives for transparent actions by governments and industry and provide an objective around which reformers can rally. However, many stakeholders, including governments, are emphasizing that transparent revenue reporting, while important, is not enough. Effective management of oil, gas, and mining resources requires attention along the entire management chain — from granting access to those resources, to monitoring operations, to collecting taxes, to improving economic management decisions, to spending resources effectively for sustainable growth and poverty reduction (see figure below).

An EITI++ framework approach encourages countries to take a strategic and comprehensive view of how to translate wealth from the extractive industries into growth and development. Implementing the EITI++ approach means that a government has (or is interested in developing) a vision for the good governance and sound management of its extractives sector and a (rolling) program of policy actions, institutional capacity-strengthening, and investments consistent with its vision. The program, framed against the value chain needs to be prioritized, sequenced and tailored to country circumstances. This methodology has already been used to analyze the extractive sectors of several countries globally.

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and budgets for the project and review quarterly and annual implementation and audit reports in accordance with its TOR.

29. In 2010 the Government issued a directive under which all externally-supported projects would be implemented using country systems and existing PIUs would be discontinued beyond December 2011. Accordingly, the implementation arrangements for this project conform to the directive and have been designed to meet Government objectives of mainstreaming project implementation capacity in the beneficiary institutions and World Bank objectives of ensuring professional, accountable and timely project implementation.

30. The Project will be implemented by a Project Management Team (PMT) in MNREE, reflecting the central role that the Ministry plays in the development of all components of the project. The PMT will be responsible for all financial management and procurement matters under the Project. Project management will be conducted in accordance with the Project Implementation Manual (PIM).

31. The PMT has been drawn from officers of MNREE’s Planning Department, Procurement Unit, Accounts Unit and Environmental Affairs Department, who will be accountable for implementation of the fiduciary and safeguards responsibilities under the Project, as defined in Annex 3.

Figure 1: Project Implementation Arrangements

32. The PMT will manage an IDA Designated Account and financial transactions and procurements for the other institutions which are also beneficiaries of the Project. This relieves the burden on the beneficiary institutions and ensures funding and procurement transactions are consolidated in one agency operating under World Bank guidelines.

MNREE Project Management Team provides financial management and procurement functions for beneficiary agencies

PSC provides oversight to the MNREE Project Management Team

Chair: Principa l Secretary, MNREE

Project Steering Committee

MNREE

Project Management Team

GSD DOM EAD MoF MRA MoE Others

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33. In order to ensure that the management of the Project, including performance monitoring and planning, benefits from relevant technical expertise, one “Focal Point” will be designated for each beneficiary institution to provide technical inputs into project implementation, as set out in Terms of Reference that form part of the PIM. An inter-ministerial Technical Working Group is to be established at implementation comprising the Focal Points. This will be a successor to the inter-ministerial Project Preparation Taskforce created by the Government during project preparation to work closely with the World Bank and EU project teams.

34. Further details of project implementation are given in Annex 3.

B. Results Monitoring and Evaluation 35. The PMT will be responsible for results monitoring and evaluation (M&E) in accordance with the indicators and milestones included in the Results Framework (Annex 1). The Monitoring and Evaluation Officer in the PMT will be responsible for collection of data from relevant government departments, providing an update on indicators for each implementation support mission, and preparing the relevant section of the annual Project Monitoring and Procurement Report in the format set out in the PIM. The Annual Work Plan will be aligned to the annual targets set out in the monitoring table (Annex 1).

36. A comprehensive mid-term review of the project will be undertaken approximately two years after the start of implementation. This will provide an opportunity for major mid-course adjustments, such as reallocation of funds.

37. The table below summarizes the key planning and reporting documents that will help monitor project progress and results:

Table 2: Project Planning and Reporting Documents Type of report Period Due date Remark

Planning (ex ante) Work Plan and Budget Annual

(July 1 – June 30)

May 15 Prepared by Project Management Team;

Procurement Plan Annual (July 1 – June 30)

May 15 Prepared by Project Management Team; First one covers 18 months (February 23, 2011);

Reporting (ex post) Interim Financial Reports (IFRs) with Procurement and Physical progress (including M&E) Annexes

Quarter Nov 15; Feb 15; May 15; and August 15

Prepared by Project Management Team;

External Audit Annual (July 1 – June 30)

Dec 31 Prepared by Auditor General’s office; Comprises a Management Letter prepared by MNREE. First one can cover up to 18 months.

38. Strengthening client capacity for monitoring and evaluation for the sector will be an integral part to enable the relevant institutions to keep track of environmental and social

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safeguards implementation and compliance. The project will provide some support to the improvement or set-up of relevant management information systems as needed (see SESA below).

C. Sustainability 39. The principle of sustainability is embedded in the Project design. The PDO is to improve the efficiency, transparency and sustainability of mining sector management. The Project will help the Government to strengthen mining sector governance thereby improving the chances that mineral resources will be transformed into lasting development benefits, through the capture and wise use of resource rents, positive linkages with the local economy and communities and careful management of environmental and social impacts of mining, thereby averting the “resource curse”. 40. The principle of sustainability is also built into Project implementation arrangements. The Project will use Country Systems rather than a self-standing PIU. Implementing institutions and their staff will benefit from capacity building through direct engagement in project implementation, skills development, strengthening administrative practices and improving office facilities.

V. Key Risks and Mitigation Measures 41. Potential risks are set out in the Operational Risk Assessment Framework (see Annex 4). Overall project risks are rated ML (Medium Likelihood) at implementation before mitigation. Risks identified are manageable through appropriate and available mitigation measures. The “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and updated January 2011, shall apply to the project.

VI. Appraisal Summary

A. Economic and Financial Analysis 42. The potential scale of the sector was estimated in the MSR in 2009. It projected the value of minerals output reaching some US $250 million by 2012, with potential to double that by the end of the decade, provided binding constraints mentioned above can be removed. Progress by Globe Metals and Mining in developing the Kanyika niobium mine and other positive exploration results, coupled with the generally strong mineral price environment, provides continuing support for this assessment.

43. The Project is intended to enhance the Government’s ability to manage the country’s mineral resources wisely. By supporting the development of efficient, transparent and sustainable management of the sector, Malawi can be expected to both expand mineral investment flows and optimize their contribution to sustainable development, including improving revenue collections.

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B. Technical 44. The project design is based on analysis provided by the MSR (which included a rapid social and environmental assessment), project identification studies undertaken on behalf of the EU and additional focussed assessments commissioned during project preparation on topics such as environmental and social management, mining cadastre, geo-data management centre and artisanal and small-scale mining. The Government established a Project Preparation Taskforce to draw together personnel from the beneficiary institutions, chaired by the designated Project Coordinator, which has served as the counterpart team to the World Bank and EU teams during preparation. The continuous dialogue and joint preparation of activities has been designed to help to find the right balance between government capacity, sector maturity, the local context and international best practises in designing project activities.

45. The project design also reflects lessons learned from TA in other countries in similar contexts as more fully explained in Annex 3 of this PAD.

C. Financial Management 46. A financial management assessment has been conducted by the Bank, and actions to strengthen the MNREE’s financial management capacity have been determined. The assessment has concluded that with the implementation of these actions, the proposed financial management arrangements will satisfy the Bank’s minimum requirements under OP/BP10.02. Because of lack of capacity in dealing with World Bank projects, the overall financial management risk for this financing is assessed as Medium-Impact during preparation and Medium – Likelihood during implementation. Mitigation measures have been planned accordingly. A brief summary of the financial management capacity assessment and project financial management arrangements are provided in Annex 3. More details are available in the project files.

D. Procurement 47. A procurement assessment has been conducted by the Bank and has concluded that MNREE has limited capacity to carry out procurement activities related to the proposed project. MNREE is unfamiliar with Bank procurement procedures. Because of lack of capacity in dealing with World Bank projects, the overall procurement risk for this financing is assessed as Medium-Impact during preparation and Medium-Likelihood during implementation. Mitigation measures have been designed accordingly in agreement with MNREE, and include training and the support of a procurement specialist. The Procurement Plan for the first 18 months of the project is dated February 23, 2011. It will be updated, thereafter, at least annually to reflect project implementation needs. A brief summary of the procurement capacity assessment and project procurement arrangements are provided in Annex 3. More details are available in the project files.

E. Social (including safeguards) 48. A social development specialist is conducting an initial stock-taking of social data and preparing a stakeholder analysis. Mining is a relatively new sector in Malawi and the specific locations which may be the focus of mining developments in the future are to be determined; the

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development of consultative structures and arrangements for dialogue will need to take this uncertainty into account. MNREE has initiated efforts to address the social issues in mining in an integrated manner at national level that would include influx management and HIV/AIDS prevention, as well as mainstream livelihood and gender issues.

49. The Strategic Environmental and Social Assessment (SESA- see below) to be undertaken during the project will provide a diagnosis of the social issues associated with mining sector development. The SESA will then provide a basis for development of policies to mitigate social risks consistent with international good practice. Recommendations of the SESA with respect to ASM, will also aid in the development of support under the project to ASM, through incorporation into Component C-3, as appropriate. The technical assistance under the project will not, however, provide support to land use planning or spatial planning.

50. The proposed Project is limited to the provision of technical assistance and is not expected to result in any direct environmental or social impact. In particular, there will be no resettlements or land acquisitions.

F. Environment (including safeguards) 51. The Project is expected to have significant positive environmental impacts through improving environmental management of the mining sector, promoting modern mining methods and enhancing environmental management capacity in MNREE. As a technical assistance operation, activities will have no significant physical impact on the natural or social environment. Aerial surveys and modest office refurbishment will take place under works contracts, however, there will be no new construction or significant civil works. Furthermore, the project will only provide support for establishment and improvement of general sector management systems, and will not engage in zoning, planning or preparatory activities for specific investments linked to identifiable impacts.

52. It is widely understood that mining activities often involve risk of significant adverse impact on natural habitat, people and their livelihoods and cultural resources if inadequate arrangements are in place to manage them. To help the Government address such safeguards concerns for future mining investments (which are not part of this project), a key project activity will be the preparation of a comprehensive SESA. The SESA will involve a consultative process to help the Government to: (a) diagnose the key environmental and social problems and opportunities associated with the anticipated growth of Malawi’s mining sector; (b) identify the policy, legal, regulatory, and institutional adjustments and capacity-building actions needed to minimize the adverse environmental and social impacts of mining operations and associated infrastructure development, while enhancing the positive impacts; and (c) propose specific measures that Government can implement in the near future to improve the environmental and social sustainability of mining in Malawi, particularly through the MGGSP.

53. Although the proposed Project is limited to the provision of technical assistance and is not expected to result in any direct environmental or social impact, the support to sector development means strategic environmental assessment is appropriate, and the project has therefore been classified as Category B, triggering OP/BP 4.01 (Environmental Assessment). A rapid social and environmental assessment was previously prepared as part of the MSR. MNREE

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prepared a comprehensive TOR for the SESA at appraisal, to the satisfaction of IDA, which was disclosed in country on February 7, 2011, and via the Bank’s InfoShop. The SESA will be conducted during the early stages of project implementation, leading to an action plan for: (i) revising (and expanding where appropriate) existing environmental and social regulations for mining sector, including guidelines and standards, and (ii) building government (and potentially private sector and civil society) capacity for environmental and social management in the mining sector. The action plan will be implemented in coordination with other project activities to ensure that development of sustainability mechanisms does not lag behind promotion of investments in the sector.

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Physical Cultural Resources (OP/BP 4.11) [ ] [X] Involuntary Resettlement (OP/BP 4.12) [ ] [X] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects in Disputed Areas (OP/BP 7.60)* [ ] [X] Projects on International Waterways (OP/BP 7.50) [ ] [X]

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Annex 1: Results Framework and Monitoring

MALAWI: Mining Governance and Growth Support Project

Results Framework6

Project Development Objective (PDO): To improve the efficiency, transparency and sustainability of mining sector management.

PDO Level Results Indicators*

Cor

e Unit of Measure

Baseline Cumulative Target Values** Frequen

cy Data Source/ Methodology

Responsibility for Data Collection

Description (indicator

definition etc.) YR 1 YR 2 YR3 YR 4 YR 5 Indicator One: Efficiency Days taken to issue mineral rights

Days 90

90 90 90 90 45

End of Project

MNREE PMT Maximum days taken to issue mineral rights

Indicator Two: Transparency Annual public reporting of mineral sector tax revenues

Yes/No No No No No No Yes End of Project

Ministry of Finance

PMT Reporting of all mineral sector derived revenues to the Government

Indicator Three: Sustainability Percentage of mining operations subjected to environmental certification

% 50% est 50% 50% 50% 50% 90% End of Project

EAD PMT All permanent mining operations that are subjected to certification procedures required by relevant

6 Because the main beneficiaries of this project are institutions, the project does not report on the otherwise mandatory core indicator “Direct project beneficiaries (number), of which female (%)”.

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environmental legislation

INTERMEDIATE RESULTS

Intermediate Result: Component A: Better Management of Mineral Rights and Operations

Multi-stakeholder forum on mining sector established with civil society participation (A-1)

Yes/No Ad hoc and reactive arrangements for stakeholder dialogue

Ad hoc and reactive arrangements for stakeholder dialogue

Ad hoc and reactive arrangements for stakeholder dialogue

Public access to mining related data and information

Public access to mining related data and information

Regular meetings of multi-stakeholder forum taking place

Annual Stakeholders

PMT

Modern mining legislation in place (A-2)

Yes/No Mining Policy in place but new mining act and regulations, amended mineral taxation legislation and model mining agreement still under development

Mining Policy in place but new mining act and regulations, amended mineral taxation legislation and model mining agreement still under development

New mining act drafted and presented to Cabinet

New model mining agreement developed

New mining regulations submitted to relevant authorities

New mining regulations submitted to relevant authorities

Annual MNREE PMT

Modern computerized mining cadastre in use (A-3)

Yes/No Minerals licensing conducted using slow and paper based system

Minerals licensing conducted using slow and paper based system

Cadastral regulations issued

Cadastral unit set up

Computerized cadastre in use

Computerized cadastre in use

Annual MNREE PMT

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Health, safety, environmental and social management policies and monitoring systems completed (A-4&5)

Yes/No Gaps exist in policy framework and monitoring systems are in need of significant strengthening

Gaps exist in policy framework and monitoring systems are in need of significant strengthening

Gaps identified and recommendations made thru SESA process

Gaps identified and recommendations made thru SESA process

Gaps identified and recommendations made thru SESA process

Policy framework complete and monitoring system in place

Annual EAD PMT

Intermediate Result: Component B: Better Generation and Management of Mineral Revenue

Standardized fiscal regime (B-1)

Yes/No Royalty and tax terms open to negotiation and selective concession

Royalty and tax terms open to negotiation and selective concession

Royalty and tax terms open to negotiation and selective concession

Standardized royalty and tax laws and regulations drafted

Standardized royalty and tax laws and regulations drafted

Standardized royalty and tax laws and regulations drafted

Annual Ministry of Finance

PMT

Mineral tax administration and revenue management developed (B-2 to 5)

Yes/No No specialized arrangements for minerals tax administration and revenue management

No specialized arrangements for minerals tax administration and revenue management

Revenue forecasting tools and capacity established

Mineral tax administration manual developed

The tax authorities conducting tax audits of all major mining companies

Policies to address revenue volatility and savings introduced

Annual Ministry of Finance

PMT

Intermediate Results : Component C: Better Promotion of the Mineral Sector

Geo-data management center providing online access (C-1&2)

Yes/No Only old and insufficient geo-data available

Only old and insufficient geo-data

Existing data digitized

Country-wide airborne survey complete

New mineral resource assessments

Geo-data management centre in operation

Annual MNREE PMT

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available d completed

and accessible on-line

Number of students newly enrolled in mining-related tertiary education programs in Malawi (with breakdown by gender) (C-4)

Number Number M 32 F 10 In 2010

Number M 32 F 10

Number M 32 F 10

Number M 50 F 20

Number M 65 F 40

Number M 80 F 70

Annual Ministry of Education

PMT Baseline is 1st year geology students; targets include new mining engineering enrollments

Intermediate Results : Cross-cutting: Strengthened Regulatory Institutions

Number of public service personnel trained in sector-relevant fields (with breakdown by gender) (A-1 to 5, B-2, C-1 to 5)

Number trained

Number M 0 F 0

Number M 0 F 0

Number M 10 F 5

Number M 25 F 10

Number M 45 F 30

Number M 65 F 50

Annual MNREE PMT Completed training supported by the project (cumulative totals)

*Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators) **Target values should be entered for the years data will be available, not necessarily annually.

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Annex 2: Detailed Project Description The Project has four components, each of which comprises several sub-components. The objectives of each, the activities to be supported by each and indicative costs of implementation by project year are set out in this Annex. Component A: Managing Mineral Rights and Operations The objective of this project component is to support the Government to build an efficient, transparent and environmentally and socially sustainable framework for managing mineral rights and operations. To achieve this, the project will support the following:

• A-1 Public Communications, Outreach and Stakeholder Dialogue by setting up the structure and support arrangements for continuous and formalized dialogue among stakeholders on mining policy issues and oversight of policy implementation, as well as design of MNREE’s communications and outreach functions.

• A-2 Reforming Minerals Legislation by preparing drafting instructions for the new mining law and developing a body of regulations to give effect to it, covering mineral licensing, monitoring and inspection functions, health, safety and environmental standards, and a model Mining Development Agreement.

• A-3 Modernizing Minerals Licensing by establishing a modern computer-based cadastral system and administrative arrangements for the efficient and transparent allocation and management of mineral exploration and mining rights by MNREE.

• A-4 Strengthening Mineral Operations Supervision by building capacity of MNREE for regular monitoring and inspections of exploration, mining and mineral processing operations using appropriate equipment.

• A-5 Strengthening Environmental and Social Management of Mining by establishing a comprehensive environmental and social management framework and robust monitoring systems at central, district and community levels.

Component A-1: Public Communications, Outreach and Stakeholder Dialogue The process of mining sector reform launched by the Government will require continuous engagement with stakeholders in order to maintain momentum and legitimacy. Civil society, in particular, has mobilized to advocate for active participation in policy dialogue at a national level and has contributed to the process of developing a national mining policy, a new mining law, monitoring of mining operations and revenue transparency measures. The Bank’s MSR benefitted greatly from the active participation from stakeholders from civil society and from industry. This project sub-component will assist the Government to set up the structure and support arrangements for continuous and formalized dialogue among stakeholders on mining policy issues and oversight of policy implementation, to include design of MNREE’s communications and outreach function. The specific activities supported under this sub-component will be defined on the basis of an assessment being conducted during project preparation by a Social Development Specialist, but is likely to include (i) development of MNREE’s communications strategy on mining-related issues, (ii) formal stakeholder consultation processes, workshops and related events, (iii) related training and awareness-raising for participants in such processes.

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Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.05 0.05 0.05 0.05 0.05 0.25

Component A-2: Reforming Minerals Legislation The legal and institutional framework for managing the mining sector is defined in broad terms by the Government’s new national mining policy. Under it a new mining law is being prepared to replace that of 1981, which will define the rights and obligations of mineral right holders and define the regulatory mandates of relevant government institutions. This project sub-component will assist the Government to prepare drafting instructions for the new mining law and develop a body of regulations to give effect to it, covering mineral licensing, monitoring and inspection functions, health, safety and environmental standards, and a model Mining Development Agreement. The assessment of the existing mining legislation and recommendations for new legislation were contained in the MSR (see Box 2). Activities under this sub-component will include (i) engagement of mineral and environmental law and regulation experts to assist MNREE finalize the new mining law, develop a body of regulations to give effect to it (including a model mining agreement) and establish appropriate health, safety, environmental and social standards, (ii) consultation workshops to share international experience and obtain inputs of stakeholders as the law, regulations and standards are developed, (iii) support with dissemination of information, reports and legal drafts relating to the above activities and (iv) staff training in minerals and environmental law and in contract negotiation skills (for mining agreements). Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.10 0.20 0.15 0.15 0.15 0.75

Box 2: Mining Law Reform

The existing legislative arrangements for mining rely excessively on the discretionary exercise of ministerial powers and ad hoc negotiation of mineral agreements. The new law should reduce such discretion to a minimum and where some discretion is retained make its exercise subject to clear criteria and receipt of technical advice. There should be a review of the scope of mineral agreements and a model mineral agreement included as part of the mining legislation. The licensing system should be streamlined, made more transparent arrangements and underpinned by legislation. The role of the Minerals Licensing Committee in advising the Minister on the award of mineral rights should be reviewed. Accountability of this body for the advice it prepares would require that its composition, functions and reporting requirements are regulated by law. To complement mineral sector policy goals on local content, community development and vulnerable groups, appropriate legislative provisions are needed. Because of its age, provisions in mining legislation need to be harmonized with those of the more modern environmental legislation to give full effect to the objectives of national environmental policy. Source: MSR (2009)

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Component A-3: Modernizing Minerals Licensing This project sub-component will assist the Government to establish a modern computer-based system and administrative arrangements for the efficient and transparent allocation and management of mineral exploration and mining rights. According to information from the Department of Mines the administration of licensing is prone to inefficiency and considerable delay. This is partly because it relies upon a number of steps in which paper records are passed from hand to hand and calls for review and decision meetings that occur infrequently and irregularly. Establishing a rules-based mineral titles system using a GIS-data platform (“minerals cadastre”) would largely remove the need for manual verification and processing, thereby speeding the process and reducing the scope for arbitrariness. As part of project preparation a consultant has been engaged by MNREE to identify the key actions that need to be taken to set up a modern cadastre, including technical specifications. Activities under this sub-component will likely include: (i) Support with equipment and operating expenses needed to undertake field surveys of locations and reorganize mineral rights dossiers and filing procedures in preparation for installation of the new cadastral system. (ii) Design and installation of the GIS-based cadastral system (including the facility housing the system, peripheral hardware and software). This activity will be launched with a feasibility study and detailed design specification as a basis for contracting a specialist firm to build, test and handover the new system. (iii)The creation of a website interface for user access. Such a system will provide appropriate security and access protocols and relevant fee arrangements, consistent with normal mineral industry practices. (iv) Training and knowledge exchanges on administration of mineral licensing for the staff of the unit responsible for the cadastre. The scope for connecting the mining cadastre with other data managements systems will be evaluated (see sub-component C-2). The indicative cost of these activities is drawn from prior experience in countries at a similar stage of cadastral development (see Box 3). Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.20 0.40 0.60 0.15 0.15 1.50

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Component A-4: Strengthening Mineral Operations Supervision This project sub-component will assist the Government to build capacity to supervise mineral exploration, mining and mineral processing operations through regular monitoring and site inspections using appropriate equipment. The MSR found that the Mining Inspectorate had five mines inspectors in post and only one vehicle between them. Although staff numbers have increased since then, this was achieved only by taking on fresh engineering graduates without mining-related qualifications. The unit has substantial equipment needs on top of inadequate office space. Activities under this sub-component will include: (i) Engagement of mines operations, health and safety experts to assist MNREE develop guidelines and procedures for undertaking routine monitoring and inspection and provide mentoring to staff under development. This is important since academic and professional skills development need to be supplemented by experience and leadership to be able to perform credibly at mining operations and offices. This expertise will also assist MNREE in developing technical regulations (see sub-component A-2). (ii) Formal staff training in relevant subjects, such as mining engineering, minerals processing and environmental science and professional development specific to functions of the inspectorate (e.g. mine health and safety, explosives and blasting, drilling operations, emission and effluent testing and analysis, machinery integrity testing). (iii) Study tours and knowledge exchanges to gain experience in monitoring and inspection functions.

Box 3 Costs of Modernizing a Mining Cadastre

The budget for modernizing a mining cadastre varies with the size of the cadastre (number of licenses), the complexity of the pre-cadastre phase (needs for completion of the cartographic coverage, reorganize filing, refurbishment of the offices, etc.) and the number of offices (if the cadastre is decentralized or not). The average amount spent in countries such as Madagascar or Mozambique would be today slightly over one million dollars. The following table represents a simplified and estimated distribution of the required costs, where design of the computerized cadastre, training and maintenance could be considered as fixed costs. These do not include the expenses required for associated legal reforms, or the internal costs of the local team devoted to the pre-cadastral activities.

ACTIVITY US$ %

Geodesy 150,000 12.5 Manual cadastre 200,000 16.7 Computerized cadastre

300,000 25.0

Equipment 200,000 16.7 Training 200,000 16.7 Maintenance 150,000 12.5 Total 1.200.000 100.0

Source: World Bank, 2010

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(iv) Supply of equipment needed for monitoring and test-work and for undertaking site inspections (e.g. field vehicles, GPS, survey equipment, dust and gas monitors, portable UV/VIS spectrophotometers, theodolite, monitoring equipment for radioactive minerals, field test work kits, etc.). The timing of equipment purchases will be coordinated with human resource planning, staff training and facilities refurbishment. (v) Equipping and refurbishing the Department of Mines’ offices and laboratory (ore preparation, mineral processing test equipment, assay equipment, lapidary). Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.20 0.50 0.55 0.75 0.50 2.50

Component A-5: Strengthening Environmental and Social Management of Mining The objective of this project component is to support the Government to build an efficient, transparent and environmentally and socially sustainable framework for managing mineral rights and operations. The design of the sub-component draws on the findings of the rapid environmental and social analysis which was conducted as part of the MSR. This analysis found that there are already important and progressive policy elements in place, including an established EIA system, and environmental assessment guidelines specifically for the mining sector, but that implementation capacity and resourcing remains weak. The sub-component will support the Government to conduct a full SESA during the early stages of project implementation, which will establish a comprehensive action plan for strengthening sector social and environmental management systems in parallel with sector development activities. Some capacity-building activities are expected to be initiated in parallel with the development of the SESA, including (i) development of a set of environmental standards specific to mineral exploration, mining and minerals processing which will be used to guide operations planning and compliance monitoring, (ii) building capacity in the Department of Environmental Affairs and the Department of Mines for monitoring and inspecting environmental compliance of exploration, mining and mineral processing operations, (iii) providing equipment needed by these institutions for sampling and laboratory testing and (iv) refurbishing Department of Environmental Affairs offices and laboratory. This sub-component will finance the SESA process, and broad-based environmental and social training, management-strengthening and consultation activities, including those early activities identified above. Other activities evaluated by the SESA and included in an action plan for implementation will either be financed under this sub-component or fully mainstreamed throughout the project components, as appropriate. The latter may include: strengthening of consultation and participatory monitoring systems under sub-component A-1; inclusion of environmental standards and improved guidelines, including introduction of appropriate performance clauses and financial incentives into mining agreements under minerals legislation in sub-component A-2; appropriate treatment of environmentally and socially sensitive areas in the management of the mining cadastre in sub-component A-3; environmental compliance monitoring as a component of operations supervision in sub-component A-4; training and

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awareness for ASM operatives in sub-component C-3; and training under tertiary education activities in sub-component C-4. Box 4: SESA Objectives

The SESA will identify and design appropriate environmental, social and resettlement policies and institutional arrangements for mining and ancillary infrastructure development, including regional and community development planning and agreements. The SESA TOR is under preparation and will be disclosed prior to appraisal. It is planned that on completion of the SESA, its findings will be incorporated into project work plans, and if necessary the Mid-term Review, so that specific additional implementation activities can be supported. Among the activities whose merit and modalities will be evaluated by the SESA are (i) development of a resettlement policy and guidelines for mining-impacted communities, including improved consultation procedures, that are sensitive to gender considerations, (ii) creation of an environmental and social management database, and improving public access to data, (iii) creation of grievance and dispute resolution mechanisms in mining-impacted areas, (iv) arrangements for engagement of citizens and communities in monitoring of mining and ancillary operations, (v) systems for improving funding of environmental inspection and compliance monitoring, and (vi) strengthening capacity at district and community level for planning and absorption of mining revenues. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.20 0.25 0.25 0.40 0.40 1.50

Component A: Indicative Costs (US$ million)

Sub-component

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Public Communications, Outreach and Stakeholder Dialogue

0.05 0.05 0.05 0.05 0.05 0.25

Reforming Minerals Legislation

0.10 0.20 0.15 0.15 0.15 0.75

Modernizing Minerals Licensing

0.20 0.40 0.60 0.15 0.15 1.50

Strengthening Mineral Operations Supervision

0.20 0.50 0.55 0.75 0.50 2.50

Strengthening Environmental and Social Management of Mining

0.20 0.25 0.25 0.40 0.40 1.50

Totals 0.75 1.40 1.60 1.50 1.25 6.50

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B. Generating and Managing Mineral Revenue The objective of this project component is to support the Government to develop transparent arrangements for optimal generation and use of mineral revenues. To achieve this, the project will support the following:

• B-1: Reforming the Mineral Royalty and Tax Regime by completing the establishment of a coherent, standardized and globally competitive fiscal regime for mining through design and implementation of suitable royalty and tax regulations.

• B-2: Maximizing Mineral Revenue Collection by building capacity in royalty and tax administration.

• B-3: Building Mineral Revenue Transparency so that revenue collection arrangements can be subjected to scrutiny and assurances given to the public that revenues are being properly accounted for.

• B-4: Developing Mineral Revenue Forecasting as part of the Government’s annual budget preparation cycle and medium-term macro-economic planning.

• B-5: Developing Mineral Revenue Management Policies to deal with potentially large and volatile mineral revenue flows and determine allocations made from funds collected.

Component B-1: Reforming the Mineral Royalty and Tax Regime This project sub-component will assist the Government to complete the establishment of a coherent, standardized and globally competitive fiscal regime for mining through design and implementation of suitable royalty and tax regulations. The MSR found that the components of the fiscal regime and tax rates are broadly consistent with those of other countries at a similar stage of mineral sector development in the region, however, certain aspects of the fiscal regime still need to be clarified, in particular, royalty rates, regulations on application of the resource rent tax, safeguards against thin capitalization and transfer pricing and the criteria for the state’s financial participation in mining ventures. Activities under this sub-component will include (i) engagement of mineral taxation experts to assist Ministry of Finance and MNREE review and implement royalty and taxation measures, to include legislative, contractual and administrative instruments, (ii) consultation workshops to share international experience and obtain inputs of stakeholders as the fiscal measures are developed and (iii) support with dissemination of information, reports and legal drafts relating to the above activities. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.15 0.10 0.00 0.00 0.00 0.25

Component B-2: Maximizing Mineral Revenue Collection This project sub-component will assist the Government to strengthen royalty and tax administration, so that mineral revenues collections are maximized. The MSR found that without appropriate safeguards there is a risk of substantial tax leakage, thereby reducing the value of mineral resources to the country, undermining the integrity of the fiscal regime, and breeding public mistrust and opposition to mining. The Office of the Commissioner of Mines is charged

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with administering royalty but has limited experience and is ill-equipped to deal with an expansion in the numbers of operations subject to royalty. The Malawi Revenue Authority has limited experience in assessing mining company tax returns and in conducting the requisite audits. Capacity is needed to monitor many aspects of mineral operations (e.g. price, output, export, imports, service and sub-contracts, marketing contracts, inter-affiliate transactions) and to undertake physical and financial audits of company operations and accounts. Since more than one institution is involved, there need to be information sharing conventions backed up by data sharing and management systems. Activities under this sub-component will include (i) engagement of mineral tax administration experts to assist in designing administrative procedures and guidelines (e.g. mineral tax audit manuals) and provide on-the-job training, (ii) formal training in mineral tax principles and specialized topics, (iii) study tours and attachments for officials, (iv) consultation workshops to share international experience and obtain inputs of stakeholders as the royalty and tax administration measures are developed and (v) provision of office facilities and equipment necessary to perform institutional mandates effectively, including data sharing and management systems. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.20 0.20 0.15 0.10 0.10 0.75

Component B-3: Building Mineral Revenue Transparency This project sub-component will assist the Government to evaluate and design measures to strengthen mineral revenue transparency so that revenue collection arrangements can be subjected to scrutiny and assurances given to the public that revenues are being properly accounted for. This may include support for an evaluation of the benefits and modalities of adopting the Extractive Industries Transparency Initiative (EITI).7

Activities under this sub-component could include (i) consultation workshops and study tours to share international experience and obtain inputs of stakeholders as revenue transparency policies and initiatives are evaluated and (ii) support to revenue agencies in collating and reporting sector data, including revenue data. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.05 0.10 0.00 0.00 0.00 0.15

Component B-4: Developing Mineral Revenue Forecasting This project sub-component will assist the Government to forecast mineral revenue as part of its annual budget preparation cycle and medium-term macro-economic planning. Forecasts are also useful as part of tax regime design (Component B-1), tax administration planning (Component 7 Grants from the EITI Multi-donor Trust Fund are available to support implementation of EITI in countries which decide to adopt EITI. The project would only support activities complementary to those supported by such grants for which grant funding alone is insufficient or not suitable.

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B-2) and in formulating revenue management policies (Component B-5). The objective would be to develop institutional arrangements and skills for organizing data inputs, carrying out computer-based modeling and using and reporting the outputs. Activities under this sub-component will include (i) engagement of mineral economists to assist in defining data requirements and computer model specifications, (ii) training in mineral economics and spreadsheet modeling and (iii) workshops to develop institutional arrangements for conducting mineral revenue forecasts. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.05 0.10 0.10 0.00 0.00 0.25

Component B-5: Developing Mineral Revenue Management Policies This project sub-component will assist the Government to design and implement policies for the management of mineral revenues and allocations made from funds collected (e.g. royalty sharing at district and community levels). As the mining sector grows, both the magnitude and volatility of mineral-based revenues flows will need to be factored into Government policies for managing public finances in order to avoid dislocation of the economy through the “resource curse”. The MSR found that the option of mineral revenue sharing at district and community levels is one in which there is a great interest among stakeholders but no clearly defined policy response has been formulated (see Box 5). Activities under this sub-component will include (i) engagement of mineral revenue management experts to assist Ministry of Finance and MNREE review and plan mineral revenue management and allocation measures, (ii) consultation workshops to share international experience and obtain inputs of stakeholders as the revenue management measures are developed and (iii) support with dissemination of information, reports and legal drafts relating to the above activities. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.00 0.00 0.05 0.10 0.00 0.15

Box 5: Mineral Revenue Sharing

The premise for allocating mineral revenues back to mineral-producing areas is to help support decentralized governance structures, given the increased demands for service delivery that typically arise due to rising expectations and in-migration as a mining activity develops, to ensure that there is a tangible benefit stream for those most impacted by mining and to complement private sector initiatives to support community development in and around mining areas. However, these factors need to be weighed carefully against national equity considerations and risks associated with pre-allocation of revenues, especially if those revenues are volatile and the absorptive capacity of recipient institutions and communities is limited. This is an area where it is recommended that policy options are examined in further depth, drawing on experience from other countries and factoring in the particular fiscal policy environment and social conditions present in Malawi. MSR (2009)

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Component B: Indicative Costs (US$ million)

Sub-component

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Reforming the Mineral Royalty and Tax Regime

0.15 0.10 0.00 0.00 0.00 0.25

Maximizing Mineral Revenue Collection

0.20 0.20 0.15 0.10 0.10 0.75

Building Mineral Revenue Transparency

0.05 0.10 0.00 0.00 0.00 0.15

Developing Mineral Revenue Forecasting

0.05 0.10 0.10 0.00 0.00 0.25

Developing Mineral Revenue Management Policies

0.00 0.00 0.05 0.10 0.00 0.15

Totals 0.45 0.50 0.30 0.20 0.10 1.55 Component C: Promoting the Mining Sector The objective of this project component is to support the Government to improve the enabling environment for mining sector development by acquiring and disseminating geo-data, fostering more sustainable artisanal and small scale mining, increasing the supply of Malawians trained at tertiary level in mining-related disciplines and improving the policy environment for mining-related infrastructure development. To achieve this, the project will support the following:

• C-1 Program of Geo-data Acquisition, Interpretation and Promotion, including a comprehensive country-wide airborne geo-physical survey to acquire new data, interpretation studies and resource assessments to identify promising mineral opportunities and activities to promote investor interest.

• C-2 Establishing a Geo-Data Management Center to digitize, store and increase on-line access to geo-data.

• C-3 Program of Training and Awareness Raising for Artisanal Mining to gradually improve ASM practices and institutional support to the ASM sub-sector.

• C-4 Building Capacity for Tertiary Education in Mining to increase the supply of Malawians qualified at tertiary level in mining-related disciplines in order to help build the regulatory capacity of government institutions and to alleviate the chronic skills shortage faced by a fast growing mineral sector.

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• C-5 PPP Framework for Mining-related Infrastructure to assist the Government to roll-out the Public Private Partnership (PPP) framework to the mining sector, through support to MNREE in tailoring the framework to mining-related infrastructure development and building requisite expertise.

Component C-1: Program of Geo-data Acquisition, Interpretation and Promotion An understanding of the geology and mineral potential in the national territory is an essential pre-requisite for the rational development of these resources and economic development. In most countries, regional and thematic geological mapping has been supported by the public sector so that the interest of the private sector is attracted and mining companies can concentrate on detailed exploration and evaluation of specific areas of mineralization (especially mineral deposits). This project sub-component will assist the Government to acquire and interpret information about the country’s subsoil to better assess and promote its mineral potential. The activities under this sub-component have been identified and will be gradually refined by a study of priority geo-data needs and review of functional and needs assessments of the Geological Survey Department (GSD). The design also builds on previous identification work done by the EU, especially on GSD, and prior World Bank experience in financing airborne geo-data surveys (e.g. Madagascar, Mozambique and Uganda). Activities under this component will include: i) A comprehensive country-wide airborne geophysical survey with agreed technical

specifications (see Box 6). The survey will be carried out within two years of project effectiveness, in order that the new data acquired can be interpreted and generate new mineral assessments which can then be made available publicly and used in investment promotion. The indicative cost of this activity alone will be some US$10 million subject to technical specification and cost estimation. A specialist contractor to undertake the survey will be hired and a separate contract will be issued for technical oversight at survey inception, execution and completion.

ii) Programs of additional data acquisition using satellite remote sensing, geochemistry, or other relevant data acquisition techniques. Some satellite imagery is available for purchase, whereas other data will need to be acquired by field campaigns undertaken by GSD. Much of this activity will take place in the initial years of the project.

iii) Data interpretation studies and resource assessments to identify regions or sub-regions with promising mineral potential, employing appropriate software tools and some field-based survey work conducted by GSD. Mineral resource assessments will not be site / mineral deposit –specific. Completion of activities i) and ii) will provide the basis for generating new studies and assessments of Malawi’s mineralization, which GSD can undertake with external specialist support (consultant geo-scientists and firms/institutions offering specialist data processing capabilities).8

8 The British Geological Survey, through funds provided by DfID, prepared reports and maps of the mineral resources of Malawi in 2009 drawing on existing data, much of it acquired in the 1970s and 1980s. These reports are available at the Geological Survey Department and BGS for reference and use by interested parties.

These activities are expected to undertaken on a rolling basis in accordance with identified opportunities and levels of interest in particular types of mineralization. Reports are needed not only for the mining

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industry, but also for other vital purposes such as in designing infrastructure projects, land-use planning, agricultural programs and in geo-hazard mitigation.

iv) Supply of equipment for GSD. The EU’s project identification and GSD needs assessments identified significant gaps in availability of suitable equipment to undertake the tasks within GSD’s mandate both at headquarters in Zomba (computers, laboratory, cartography section) and in the field (field equipment, vehicles and camp gear).

v) Training and other capacity building efforts for GSD in geo-data processing, interpretation, mapping, mineral assessment and promotion. Training activities will be organized to correspond with institutional reforms, human resource planning and other activities under this project sub-component. The scope of training spans fundamental training in geo-sciences (geology, geo-chemistry, geo-technics, geo-physics, seismology, economic geology, gemology) for junior inexperienced staff to advanced training to undertake technically specialized responsibilities and will entail some formal off-site academic education in addition to short-term professional training, attachments and on-the-job training. The precise training program will need to be kept under regular review and will be evaluated as part of the process of preparing Annual Work Plans and Budgets.

vi) Promotion of the geological data and knowledge through suitable media and at international conferences and industry meetings.

Box 6: The benefits and costs of geo-data acquisition through airborne geophysical surveys

Availability of more and better geological data should lead to greater interest by potential explorers and exploiters of resources and, other things being equal, put host countries in a stronger position to strike more favorable terms when allocating resource exploration and exploitation rights. This is all the more so in the current environment of high commodity prices. There is, therefore, a potentially significant public return on geo-data acquisition. Indeed, this important principle is captured in the Natural Resources Charter, which sets out key principles for transforming resource endowments into sustainable development. In general, airborne methods are usually the most cost effective tools available for both large regional reconnaissance surveys used as aids in geological mapping and for locating target areas for more detailed follow-up. Ground techniques are usually most effective when used to test targets discovered by the airborne surveys. It is difficult to predict the exact cost because many parameters will influence it. They typically include: surface to be covered, distance between air lines, survey techniques (magnetism, radiometry, and/or electro-magnetism), type of transport (helicopter or fixed wing), current fuel costs, etc. However, according to rules of thumb in usage in industry, the cost is somewhere between US$30.00/km to US$50.00 per km to which fixed costs like plan mobilization must be added. In Malawi, this would equate to 7 to 14 million dollars for a country-wide survey with one line every 500 m or 250 m respectively. The cost of this activity will be evaluated in more details before effectiveness through the assignment of a specialized geophysicist who will assist the Government in designing the campaign and producing the technical specifications.

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Indicative Costs (US$ million) Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total i) 5.00 5.00 0.00 0.00 0.00 10.00 ii) – vi) 0.25 0.50 0.75 0.25 0.25 1.75

Totals 5.25 5.50 0.75 0.25 0.25 12.00 Component C-2: Establishing a Geo-Data Management Center Geological information is essential to the Government to understand the country’s mineral potential as well as for a number of applications like environmental management or land use planning. However, the information needs to be stored and made accessible to users, including potential investors. Public access provides the underlying rationale for the investment of public funds in acquiring and managing geo-data resources. Many mineral-rich countries have been supported in the past decade to replace old, inadequate and incompatible data storage systems with a unified modern GIS-based geo-data management systems, which provide a platform for ready access to and analysis of all national geo-data at low cost to users. This sub-component will assist the Government to establish the national GIS-based geo-data management center, drawing on an evaluation conducted during preparation to plan establishment of such a center, including technical specifications. Activities under this component will include: i) Scanning and digitizing existing analogue geological, geo-chemical, geo-physical and

geo-hazard data (including reports, maps and related literature). This activity will be commenced at the start of the project, starting with compilation of an inventory of existing data.

ii) Design and installation of the data-base (including the facility housing the data-base, peripheral hardware and software). This activity will be launched with a feasibility study and detailed design specification as a basis for contracting a specialist firm to build, test and handover the new system.

iii) The creation of a website interface for public access. Such a system will provide appropriate security and access protocols and relevant fee arrangements, consistent with normal mineral industry practices.

iv) Technical training for GSD staff in administering the data-center. v) Refurbishment of the geological library, the interior of which is in poor condition. vi) Additional studies to evaluate the scope for integrating the geo-data management center

with other national data systems, like the computerized mining cadastre and any environment monitoring systems that are set up.

Bundling of activities ii) to v) under a single contract will be evaluated. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.30 1.70 0.30 0.20 0.00 2.50

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Component C-3: Program of Training and Awareness-raising for Artisanal Mining About 40,000 Malawians are said to be engaged in permanent or seasonal Artisanal and Small-scale Mining (ASM) activities, mainly focused on gemstones and industrial minerals. They have potential to grow by increasing output and producing higher value products, especially cut and polished gemstones. However, development of sustainable forms of ASM is realized only in the medium to long term and depends critically on increased organization of miners and communities, access to capital and more efficient and cleaner technology. The objective of this sub-component is to gradually improve ASM practices through institutional support to the ASM sub-sector, as measured by the proportion of ASM taking place under mining and environmental licenses and regular delivery of training and extension services to ASM by the mining and environmental authorities. Activities under this sub-component will include: i) capacity building for public mining and environmental institutions to be able to train and provide extension services to ASM participants, including appropriate equipment and ii) awareness raising, with national campaigns and workshops regarding formalization, technologies, environmental management, access to finance and trade, and health and safety conditions and community relationships. The precise scope of this sub-component is subject to the assessment being undertaken during project preparation to collect and analyze available ASM data, identify training (like gemology courses) and capacity building needs and/or legal and regulatory improvements, and potentially identify and assess mineral resources suitable for ASM. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.10 0.20 0.20 0.20 0.05 0.75

Component C-4: Building Capacity for Tertiary Education in Mining The lack of qualified and experienced mining professionals and technicians in the country is a fundamental challenge. The objective of this sub-component is to increase the supply of Malawians qualified at tertiary level in mining related disciplines in order to help build the capacity of government institutions and to alleviate the chronic skills shortage faced by a fast growing mineral sector. The activities under this sub-component will include:

i) Support for launch of degree-level and other tertiary level courses at University of Malawi (e.g. Polytechnic and Chancellor College). This activity will commence with an evaluation study to review existing proposals and generate a strategy and implementation plan.9

9 The Malawi Polytechnic is designing the curriculum for a mining engineering degree course but in order to launch this is seeking support to cover faculty expenses at launch and some vital laboratory equipment that could be housed in the Polytechnic’s existing engineering laboratories. Chancellor College, which already offers a degree course in Earth Sciences, is evaluating a possible degree course in geology and would need support in completing the evaluation, developing a curriculum, equipping a laboratory and covering faculty and other running costs at launch.

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ii) Support for development of technician skills programs leading to certification in inter alia mine safety, drilling/blasting and core drilling.

This project will not be supporting tertiary education by means of scholarships and other support to students. Such arrangements are the subject of the existing mining agreement with Paladin and form part of the Government’s requirements for future agreements as well. A preliminary assessment of tertiary education capacity needs and opportunities for mining has been prepared by the Ministry of Education and is available in the project files. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.30 0.40 0.40 0.40 0.00 1.50

Component C-5: PPP Framework for Mining-related Infrastructure Mining development has the potential to contribute to economic diversification and alleviation of infrastructure challenges, since its requirement for reliable and cost-effective transport and energy on a long-term basis can underpin public investment choices. The policy environment for promoting infrastructure development is being addressed by a number of Government initiatives, including the Public Private Partnership (PPP) framework which is being promoted by central government through the re-structured privatization agency. The objective of this sub-component is to assist the Government to roll-out the PPP framework to the mining sector, through support to MNREE in tailoring the framework to mining-related infrastructure development and building requisite expertise. This activity will build upon the Bank’s BESTAP project and PPIAF grants which provide technical assistance and capacity building to Malawi’s central PPP Unit. Activities under this sub-component will include: i) engagement of mining-infrastructure experts to assist MNREE and the PPP Unit identify and develop opportunities for mining-related infrastructure using PPP and other financing structures, ii) training in requisite skills for MNREE personnel who would form a PPP-unit in the Ministry. Indicative Costs (US$ million)

Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total all 0.00 0.10 0.15 0.00 0.00 0.25

Component C: Indicative Costs (US$ million)

Sub-component

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Program of Geo-data Acquisition, Interpretation and Promotion

5.25 5.50 0.75 0.25 0.25 12.00

Establishing Geo-Data Management

0.30 1.70 0.30 0.20 0.00 2.50

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Center Program of Training and Awareness-raising for Artisanal Mining

0.10 0.20 0.20 0.20 0.05 0.75

Building Capacity for Tertiary Education in Mining

0.30 0.40 0.40 0.40 0.00 1.50

PPP Framework for Mining-related Infrastructure

0.00 0.10 0.15 0.00 0.00 0.25

Totals 5.95 7.90 1.80 1.05 0.30 17.00 Component D. Project Management This component will provide support at implementation to MNREE to undertake project management, in accordance with the Bank’s fiduciary and other guidelines. The activities that will be supported include incremental operating costs, equipment for the Project Management Team, training on fiduciary and project management issues, project audits and engagement of short term specialists to support the PMT. More details about project management arrangements are given in Annex 3. The table below gives details of the main costs expected to be incurred for project management. Component D: Indicative Costs (US$ million) Year 1 Year 2 Year 3 Year 4 Year 5 Total Incremental Operating Costs 0.10 0.20 0.15 0.15 0.17 0.77 Goods 0.15 0.05 0.05 0.05 0.05 0.35 Training 0.20 0.10 0.10 0.10 0.10 0.60

Project Audits 0.10 0.10 0.10 0.10 0.10 0.50

Consultancies 0.10 0.10 0.10 0.10 0.10 0.50 Totals 0.65 0.55 0.50 0.50 0.52 2.72

Project: Indicative Component Costs (US$ million) Component Year 1 Year 2 Year 3 Year 4 Year 5 Total A 0.75 1.40 1.60 1.50 1.25 6.50 B 0.45 0.50 0.30 0.20 0.10 1.55 C 5.95 7.90 1.80 1.05 0.30 17.00 D 0.65 0.55 0.50 0.50 0.52 2.72 PPA and Contingencies - - - - - 2.25 Totals 7.80 10.35 4.20 3.25 2.17 30.02

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Annex 3: Implementation Arrangements

1. Project institutional and implementation arrangements

i. Project administration mechanisms

Sector-Wide Policy Development and Donor Support 1. In 2010 the Government decided to encourage the formation of Sector Working Groups as a platform for sector-wide policy dialog in consultation with stakeholders, including the private sector and donors. Mining is covered by the Energy and Mining Sector Working Group (EMSWG) and is chaired by MNREE through the Principal Secretary. The mandate of the EMSWG allows it to provide high-level stakeholder consultation and input into key policy reform programs, such as the one taking place in the mining sector and to facilitate coordination in the support provided by donors to such reforms.

Project Supervision

2. Specific oversight of project implementation will come from the Project Steering Committee chaired by the Principal Secretary, MNREE. Other members of the PSC are, from MNREE, the Director of Finance and Administration, Director of Geological Surveys, Director of Mines, Director of Environmental Affairs, Director of Forestry, Controller of Policy Planning, Controller of Accounting Services, Controller of Human Resources and Commissioner of Mines, and the Secretary to the Treasury, Commissioner General for Malawi Revenue Authority, Secretary for Education, Science and Technology and Secretary for Economic Planning and Development.

3. The PSC will provide high level guidance on the implementation of the project and general policy guidance, approve work plans and budgets for the project and review quarterly and annual implementation and audit reports.

4. The PSC held its inaugural meeting on December 20, 2010 and a second one on January 21, 2011 to review the PAD prior to Appraisal. PSC meetings will be held quarterly. The TOR of the PSC will form part of the PIM.

Implementation Team

5. In 2010 the Government issued a directive under which all externally-supported projects would be implemented using country systems and existing PIUs would be discontinued beyond December 2011. Accordingly, the project implementation arrangements conform to the directive and have been designed to meet Government objectives of mainstreaming project implementation capacity in the beneficiary institutions and World Bank objectives of ensuring professional, accountable and timely project implementation.

6. The Project will be implemented by a Project Management Team (PMT) in MNREE, reflecting the central role that the Ministry plays in the development of all components of the

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project. The PMT will be responsible for all financial management and procurement matters under the Project, including project reporting and monitoring and evaluation of performance against the Results Framework. Project management will be conducted in accordance with the Project Implementation Manual (PIM).

7. The PMT has been drawn from officers of MNREE’s Planning Department, Procurement Unit, Accounts Unit and the Environmental Affairs Department, who will be accountable for implementation of the following fiduciary and safeguards responsibilities set out in the PIM. The composition of the PMT is shown below. MNREE has undertaken that the PMT will give priority to the implementation of project activities and will further ensure a minimum of transfers of designated personnel and, in the event of vacancy, designate new personnel.

Table 3: Project Management Team Function Summary of

Responsibilities Personnel

Project Coordination Coordination and supervision of project implementation by the Project Management Team and reporting to the Project Steering Committee

Project Coordinator Deputy Project Coordinator

Procurement Conduct of all project procurements in accordance with applicable guidelines

Project Procurement Officer

Financial Management Conduct of all project financial management in accordance with applicable rules and guidelines

Project Accountant

Accounting Maintenance of project accounts

Senior Accounting Assistant

Monitoring and Evaluation Conduct of project M&E, including reporting and measuring indicators

Project Monitoring and Evaluation Officer

Environmental and Social Safeguards

Monitoring of project compliance with safeguards

Project Environmental and Social Safeguards Officer

8. Based on the Bank’s Financial Management and Procurement Assessments a number of measures will be taken to ensure that project implementation capacity in MNREE is strengthened which will, at the same time, serve to mitigate certain risks to the World Bank and its co-financier, the EU, as detailed below.

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9. The PMT will manage an IDA Designated Account and financial transactions and procurements for the other institutions which are also beneficiaries of the Project. This relieves the burden on the beneficiary institutions and ensures funding and procurement transactions are consolidated in one agency operating under World Bank guidelines.

10. In order to ensure that the management of the Project, including performance monitoring and planning, benefits from relevant technical expertise, one “Focal Point” will be designated for each beneficiary institution to provide technical inputs into project implementation, as set out in Terms of Reference that form part of the PIM. An inter-ministerial Technical Working Group is to be established at implementation comprising the Focal Points. This will be a successor to the inter-ministerial Project Preparation Taskforce created by the Government during project preparation to work closely with the World Bank and EU project teams.

(ii) Financial Management, Disbursements and Procurement a. Financial Management

Arrangements and accountability

11. The Project will be implemented by MNREE and country financial management (FM) systems will be used to a great extent, except in specific cases as mentioned below and detailed in the Project Implementation Manual (PIM).

12. The Project budget will be established separately from the Government budget and thereafter included in the Government budget as a single line of income, as well as a single line of expenditure. MNREE will open its own files for maintenance of project records.

13. The Government of Malawi is in the process of activating the project module in IFMIS and the project is expected to use this module once it is operational. Since this may not be achieved by project implementation, a two step approach has been proposed. On a temporary basis, MNREE will account for and report on funds using Excel-based spreadsheets on a cash basis, with registers kept to track liabilities and assets. Project accounts will then either be included in IFMIS or, in the event of prolonged delay in using IFMIS for separate projects, the project will finance the installation of separate accounting software, which will be of standard quality and used until IFMIS is available.

Mitigation measures

14. The FM system of MNREE has been assessed as generally adequate for the purposes of implementing this project. However, it does not have experience implementing a World Bank funded project. As such, the following mitigation measures are agreed:

(a) Accounting staff of MNREE will be sufficiently trained before and during implementation. First staff will attend Financial Management and Disbursement Course on World Bank funded projects during preparation.

(b) At implementation, in the event MNREE has not sufficiently strengthened the staff capacity, the project may finance a Financial Management Specialist who will be recruited for up to 18 months to mentor and coach the current Ministry staff in the

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use of IFMIS or the accounting software financed by the project, as well as Standard Bank procedures and processes and reporting obligations.

15. The other weakness is that the FM staff belongs to Common Service under the Accountant General and can be transferred at any time. Experience from the past is that 3 to 4 key Accounting staff can be transferred out of a ministry in a year or two. It is therefore agreed that at any time there will be:

(a) A Project Accountant and a Senior Accounting Assistant assigned to the PMT; and

(b) A pool of four accounting staff, including the Chief Accountant, who are fully involved in Accounting and Reporting for the project.

Planning and reporting

16. The MNREE Director of Finance will furnish to the Bank quarterly unaudited interim financial reports (IFRs) not later than 45 days after the end of the quarter in form and substance satisfactory to the Bank. The IFR, following a template included in the PIM, will comprise a financial report on the source and use of funds in summary, as well as detailed expenditures by component for the quarter and cumulative since the project began, and a detailed reconciliation of the Designated Account clearly showing opening and closing cash balances.

17. The MNREE Director of Finance will also submit to the Bank annual audited financial statements no later than six months after the end of the Government fiscal year. This External Audit will be provided by the Auditor General’s office in accordance with the Terms of Reference included in the PIM. The auditors will be required to express a single opinion on whether the financial statements show a true and fair view of the project’s transactions. In addition to the opinion, the auditors will be required to submit a management letter giving observations and comments. Both the audited financial statements and the management letter together with management responses will be submitted to IDA no later than December 31, corresponding to 6 months after the end of the fiscal year.

18. MNREE will ensure, within reason, that all measures to mitigate corruption are taken on board. The Bank, especially the Country Management Unit, will periodically advise on potential governance and anti-corruption measures.

Taxation

19. The credit will pay all reasonable taxes in terms of the legislation of Malawi. Equally, the Project will deduct on behalf of the Government all withholding taxes from payments to the project’s suppliers and consultants. The Project may opt to pay withholding tax on behalf of a foreign supplier or consultant but this arrangement must be taken into account at the time of evaluating suppliers’ or consultants’ bids. Provision will be made during the procurement to notify potential consultants and suppliers of the withholding tax arrangement.

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Financial covenants

20. There are no financial conditions for effectiveness. The following conditions apply during implementation:

(a) Maintain adequate financial management system and records; prepare financial statements of operations, resources and expenditures of the project.

(b) Submit to the Bank audited financial statements not later than 6 months after the end of the project.

(c) Furnish unaudited interim financial reports (IFRs) no later than 45 days after the end of each accounting quarter.

Risk assessment

21. Because of lack of capacity in dealing with World Bank projects, the overall financial management risk for this financing is assessed as Medium – Impact during preparation and Medium-Likelihood during implementation (see ORAF).

b. Disbursements

Arrangements

22. MNREE in agreement with the Accountant General will open a Designated Account in US Dollars and a Holding Account in Malawi Kwacha at the Reserve Bank of Malawi. In addition to these, MNREE will open a project specific Operating Account in Malawi Kwacha at a commercial bank of the Ministry’s choice that is acceptable to the World Bank.

23. This Designated Account will receive proceeds of the IDA credit as well as the EU financed trust fund grant. Disbursements to the DA or on account of direct payments will be made on a pro-rated basis proportionally to each financier’s contribution (IDA/EU).

24. For all activities, disbursements from both sources will be made according to a fixed rule: 82% from IDA, and 18% from the EU Trust Fund.

Disbursement method 25. At the Ministry level, the expenditures will be effected at the Commercial Bank on a reimbursement basis from the Reserve Bank Holding account.

26. At Bank level, disbursement will mainly use the following methods :

(a) Advance: The Bank advances credit proceeds into the Designated Account to finance eligible expenditures as they are incurred and for which supporting documents will be provided at a later date (see below). The first advance will be released to the Designated Account on the basis of the first Annual Work Plan and Budget as agreed between MNREE and the World Bank.

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(b) Direct Payment: The Bank may make payments, at the MNREE’s request, directly to a third party (e.g., supplier, contractor, consultant) for eligible expenditures. A minimum threshold for direct payment may be specified in the Letter of Disbursement as a percentage of the Designated Account ceiling.

27. In addition, as detailed in the World Bank Disbursement Guidelines for Projects, the following methods can also be used:

(a) Reimbursement: The Bank may reimburse MNREE for expenditures eligible for financing pursuant to the Financing Agreement that the borrower has pre-financed from its own resources.

(b) Special Commitment: The Bank may pay amounts to a third party for eligible expenditures under special commitments entered into, in writing, at the MNREE’s request and on terms and conditions agreed between the Bank and the borrower.

28. MNREE is responsible for retaining the original documents evidencing eligible expenditures and making them available for audit or inspection. In terms of supporting documentation, at the commencement of the project reimbursements will be based on SOEs periodically prepared by MNREE (and signed by Ministry of Finance. Eventually, as deemed appropriate by the Bank in the course of the project, the report-based method of replenishing the Designated Account shall be employed through the quarterly IFRs.

29. The Bank will issue a disbursement letter as part of the Financing Agreement with the recipient. The disbursement letter will set out and summarize all disbursement arrangements and procedures under the project. The letter will have as attachments: The World Bank Disbursement Guidelines for Projects; dated May 1, 2006, sample of form 2380; sample of form to advise IDA of Authorized Signatories and their specimen signatures.

30. In terms of authorizations, the government regulations will apply. The project will do quarterly Bank reconciliations which will be done and checked by separate persons.

Categories 31. To simplify disbursements and avoid recurrent amendments, there will be one main disbursement category. However, there will be separate reporting for each of the procurement categories (Goods, Works10

, Non-Consulting Services, Consultants, Training, Workshops, Operating Costs) in the procurement annex of the quarterly IFR.

32. At the moment the costs attached to all activities are estimates that could be surpassed at the time of implementation and there could be other activities that are not foreseen at the moment until the time of execution of the project; these activities and the additional amount of the

10 Aerial surveys and modest office refurbishment will take place under works contracts, however, there will be no new construction or significant civil works. Furthermore, the project will only provide support for establishment and improvement of general sector management systems, and will not engage in zoning, planning or preparatory activities for specific investments linked to identifiable impacts.

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activities occasioned by inflation or exchange rates could be taken care of through the unallocated funds.

c. Procurement

Arrangements and accountability 33. Public Procurement in Malawi is governed by the Public Procurement Act of August 2003. The Government established Internal Procurement Committees (IPC) and Specialized Procurement Units (SPU) in all Ministries and Departments as the responsible bodies for procurement in the Ministries and Departments. MNREE has a functional IPC. Procurement will therefore be undertaken directly by the Procurement Unit (PU) at MNREE.

34. Procurement under the Project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised October 2006 and May 2010; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004 revised October 2006 and May 2010 (Consultant Guidelines), and the provisions stipulated in the Financial Agreement. National Competitive Bidding (NCB) will be in accordance with the Malawi Public Procurement Act which has been reviewed and found satisfactory to the Bank subject to exclusions as stated under NCB procedures. The various procurement actions under different expenditure categories are described in general below. For each contract to be financed under the FA, the various procurement or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame will be agreed between the Borrower and the Bank in the Procurement Plan (PP). The PP will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

Mitigation measures

35. A procurement assessment of MNREE was carried out by the Bank in December 2010. The assessment concluded that MNREE has limited capacity to carry out procurement activities related to the proposed project. MNREE is unfamiliar with Bank procurement procedures and staff does not have adequate experience in procurement in donor funded projects. MNREE does not practice procurement planning and initiation of procurement process is ad hoc. Filing of procurement data is lumped in one file for all contracts and often mixed with other materials unrelated to procurement.

Table 4: Disbursement Categories Category Amount % eligible 1 Goods, Works, Non-Consulting

Services, Consultants, Training, Workshops, Operating Costs

29.50 100%

2 PPF refinancing 0.5 100% TOTAL 30.0

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36. Risk mitigation measures have been prepared and agreed with MNREE and these include:

(a) MNREE is being supported during preparation of the Project by a Procurement Specialist funded by the Project Preparation Advance, whose assignment will be completed by project effectiveness. The TOR includes provision for assistance to the PU to produce the Procurement Plan and procurement sections of the PIM, as well as on-the-job training.

(b) The Project Procurement Officer will, before effectiveness, attend short courses in procuring consulting services and goods run by ESAMI under Bank procedures, including the use of PROCYS.

(c) At implementation, in the event that MNREE has yet to fill the vacant Principal Procurement Officer post, an experienced Procurement Specialist will be recruited for up to 18 months to mentor and coach the current Ministry staff in the use of Standard Bank procedures and processes.

37. Since April, 2010, GoM has increased the number of institutions that approve Government contracts: these now include Ministries of Finance, Justice and Office of the President and Cabinet. This, it has been noted, has resulted in serious delays in signing of contracts and in some cases up to three months.

Planning and reporting

38. A PP outlines the best procurement procedures to use for a given program or project. It also helps plan and monitor implementation of project activities. The PP for implementation of the Project shall define: (a) the particular contracts for the goods, works, and/or services required to carry out activities; (b) estimated cost of each individual contract; (c) proposed methods for procurement contracts (d) expected bid opening date and (e) related review procedures. A PP for the first 18 months of the project dated February 23, 2011.

39. Details on all procurements undertaken will also be provided in a quarterly Procurement Annex to the IFRs. From time to time, procurement post review missions will aim to: (i) verify that the procurement and contracting procedures and processes followed for the projects were in accordance with the agreed procedure manual; (ii) verify technical compliance, physical completion and price competitiveness of each contract in the selected representative sample; (iii) review and comment on contract administration and management issues as dealt with by executing agencies; (iv) review capacity of executing agencies in handling procurement efficiently; and (v) identify improvements in the procurement process in the light of any identified deficiencies.

Procurement methods

40. International Competitive Bidding (ICB). All procurement above the thresholds specified for NCB shall be conducted using ICB as set forth in Section II of the Guidelines for Procurement under IBRD Loans and IDA Credits of May 2004, revised October 2006 and May

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2010. For ICB, the Ministry may apply national preference in accordance with the Guidelines. Use of Bank standard bidding documents shall be mandatory.

41. Limited International Competitive Bidding: Limited International Bidding (LIB) is essentially ICB by direct invitation without open advertisement. Under the proposed Project, the Borrower may use LIB on agreement with the Bank under circumstances where (a) there is only a limited number of suppliers, or (b) other exceptional reasons may justify departure from full ICB procedures. Under LIB, Borrower shall seek bids from a list of potential suppliers broad enough to assure competitive prices, such list to include all suppliers when there are only a limited number. Domestic preferences will not be applicable in the evaluation of bids under LIB.

42. National Competitive Bidding (NCB). NCB procedures will apply to contracts for goods and works estimated to cost less than US$500,000. NCB will be carried out in accordance with the Malawi Procurement Act No. 8 of 2003. The following additional provisions shall apply under NCB procedures: (i) an explicit statement to bidders of the evaluation criteria shall be included in the bidding documents; (ii) award shall be to the lowest evaluated responsive and qualified bidder; (iii) “bracketing” or rejection of bids outside a range or “bracket” of bid values shall not be permitted; (iv) foreign bidders would not be precluded for participation in National Competitive Bidding (v) Registration and Classification of bidders may be used for establishing bidder qualification or preparing a list for use under price comparison procedure but not as criteria for bidding and (vi) artificial division of lots into small quantities or slicing of packages and set aside for small and medium enterprises will not be used.

43. For procurement of routine items like stationery and office supplies, a supplier may also be selected following National Competitive Bidding (NCB) for supply of the routine items over a certain period. The procurement documents should stipulate the estimated quantity requirement for each item over a certain period of time, the delivery time, the terms and conditions of contract, the payment schedule. The evaluation and selection of supplier should be for each item separately based on minimum lowest unit rate and agreement of the supplier to abide by the provisions and conditions of the procurement documents. An agreement will be signed with the supplier confirming validity of the unit rate for the given period. The Purchaser will issue a Purchase Order each time it requires a specific quantity.

44. Shopping: Shopping is a procurement method based on comparing price quotations obtained from several suppliers. A minimum of three suppliers shall be considered to assure competitive prices, and is an appropriate method for procuring non-routine readily available off-the-shelf goods or standard specification commodities or non-consulting services. Requests for quotations shall indicate the description and quantity of the goods or specifications of non-consulting services, deadline for submission of quotations, as well as desired delivery (or completion) time and place. Quotations should be submitted in sealed envelopes within the deadline and be opened by the Borrower at the same time. The evaluation of quotations shall follow the same principles as NCB. The terms of the accepted offer shall be incorporated in a purchase order or brief contract.

45. Direct contracting for goods: Direct contracting is contracting without competition (single source) and may be an appropriate method under the following circumstances:

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(a) An existing contract for goods, awarded in accordance with procedures acceptable to the Bank, may be extended for additional goods or works of a similar nature. The Bank shall be satisfied in such cases that no advantage could be obtained by further competition and that the prices on the extended contract are reasonable. Provisions for such an extension, if considered likely in advance, shall be included in the original contract. (b) Standardization of equipment or spare parts, to be compatible with existing equipment, may justify additional purchases from the original Supplier. For such purchases to be justified, the original equipment shall be suitable, the number of new items shall generally be less than the existing number, the price shall be reasonable, and the advantages of another make or source of equipment shall have been considered and rejected on grounds acceptable to the Bank. (c) The required equipment is proprietary and obtainable only from one source. (d) The Contractor responsible for a process design requires the purchase of critical items from a particular Supplier as a condition of a performance guarantee. (e) In exceptional cases, such as in response to natural disaster.

46. Procurement of non-consulting services. Non-consulting services are services that are not of intellectual or advisory in nature. Such services may include internet services, freight services etc., and would include the provision of services for conducting the airborne geo-physical survey planned under the Project.

47. Selection of Consultants: Consulting services under the Project will include development of communication strategy, feasibility studies and mining advisory services. Except as detailed below, consulting services will be selected through competition among qualified short-listed firms based on Quality and Cost-Based Selection (QCBS). Consultants for financial audits and other repetitive services estimated to cost less than US$50,000 equivalent per contract may be selected through Least Cost Selection (LCS) method. Consulting services by firms estimated to cost less than US$200,000 equivalent may be selected on the basis of Selection Based on Consultant Selection (CQS). As appropriate, other selection methods such as Fixed-Budget Selection (FBS), Quality Based Selection (QBS) may be used for selection of consulting firms. Individual consultants shall be selected on the basis of Individual Consultant Selection method (IC) as per Section V of the Consultant Guidelines.

48. Single Sourcing of Consultants: Single-source selection may be appropriate only if it presents a clear advantage over competition: (i) for tasks that represent a natural continuation of previous work carried out by the firm, (ii) in emergency cases, such as in response to disasters and for consulting services required during the period of time immediately following the emergency, (iii) for very small assignments, or (iv) when only one firm is qualified or has experience of exceptional worth for the assignment.

49. Training. The PMT will formulate an annual training plan and budget which will be submitted to the Bank for its prior review and approval. The annual training plan will, inter alia, identify: (i) the training envisaged; (ii) the justification for the training, how it will lead to effective performance and implementation of the operation and or sector (iii) the personnel to be trained; (iv) the selection methods of institutions or individuals conducting such training; (v) the institutions which will conduct training, if already selected; (vi) the duration of proposed

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training; and (vii) the cost estimate of the training. Report by the trainee upon completion of training would be mandatory

50. Short lists of consultants. Short-list of consultants for services estimated to cost less than US$200,000 equivalent per contract, may be comprised entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

51. Operating Costs. Operating costs will be procured using the Government of Malawi administrative procedures which were reviewed and found acceptable to the Bank. Operating cost will not include salaries or top up salaries of civil servants.

52. Procurement decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement:

Procurement Method Prior Review Threshold

Comment

1. ICB and LIB (Goods & Works) US$500,000 All contracts 2. NCB (Goods & Works) More than US$50,000

and less than US$500,000

First two contract

3. ICB (Non-Consultant Services) As per goods First contract 4. Shopping (Goods & Works) Below US$50,000 None 5. Direct contracting All contracts above

US$1,000 All contract

53. Procurement decisions subject to Prior Review by the Bank as stated in the Consultant Guidelines:

Selection Method Prior Review Threshold

Comment

1. Competitive Methods QCBS, QBS,CQS,FBS,LCS,(Firms)

US$200,000 All contracts

2. Single Source US$1,000 All contracts 3 Individual Consultants US$100,000 All contracts

54. Contracts which are not subject to prior review will be selectively reviewed by the Bank or on behalf of the Bank by an independent Procurement Auditor during project implementation and will be governed by the procedures set forth in paragraph 4 of Appendix I to the relevant Guidelines. All documentation used for the procedures of contracting, recruitment of consulting services, evaluation and award shall be retained for subsequent examination by auditors and IDA supervision missions.

Risk assessment

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55. Because of lack of capacity in dealing with World Bank projects, the overall procurement risk for this financing is assessed as Medium-Impact during preparation and Medium-Likelihood during implementation (see ORAF).

(iii)Environmental and Social (including safeguards)

56. As no direct adverse environmental or social impacts will result from this project’s interventions, the project will not develop an Environmental Impact Assessment (EIA). Given the potential for the project to facilitate downstream investments which will involve potential impacts, however, a form of environmental assessment is still needed, and for such sector reforms the appropriate instrument is a Strategic Environmental and Social Assessment (SESA). SESA is a consultative and iterative process, which itself provides considerable opportunity for capacity building, and is best completed as part of project implementation. MNREE prepared a comprehensive TOR for the SESA at appraisal, to the satisfaction of IDA, which was disclosed in country on February 7, 2011 and via the Bank’s InfoShop.

57. The primary objective of the SESA is to identify the priority actions that Government can take to foster the environmentally sustainable and socially equitable development of Malawi’s mining sector. The specific objectives are to:

(a) Diagnose the key environmental and social problems and opportunities associated with the anticipated growth of Malawi’s mining sector.

(b) Identify the policy, legal, regulatory, and institutional adjustments and capacity-building actions needed to minimize the adverse environmental and social impacts of mining operations and associated infrastructure development, while enhancing the positive impacts.

(c) Propose specific measures that Government can implement in the near future to improve the environmental and social sustainability of mining in Malawi, particularly through the MGGS Project.

58. The SESA will consider both large-scale mining and ASM, ancillary infrastructure linked to mining developments, the environmental implications of broad sector development policies, as well as the requirements for policies specifically addressing environmental and social sustainability, and the capacity development needed for effective implementation of those policies. It will also take into account the strategic environmental assessment / planning exercises being conducted under the Regional Lake and Shire Basin watershed management projects, as well as Bank support to the energy sector, in order to ensure consistency with spatial planning approaches and recommendations being made in other sectors. The SESA will be commenced in the first year of project implementation, while the remaining years of the project would be devoted to implementation of its main recommendations.

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Box 7: Main Steps of the SESA

a) Description of existing situation and likely growth scenarios, including locations of major mines and important areas of ASM, types of minerals, principal mining technologies, and the geographic areas and types of minerals where new mining development seems likely in the foreseeable future. b) Identification of major environmental and social risks and opportunities, based on international experience and local stakeholder input. In addition to the potential impacts summarized above, the SESA will also identify the opportunities for social gains from mining development, such as (i) net employment generation; (ii) new or improved local infrastructure or services; and (iii) potential sharing of mining-generated revenues with local communities. c) Identification of geographic hotspots of high environmental and social sensitivity, including areas of high biodiversity value, social vulnerability, outstanding cultural value, and exposure to natural hazards. d) Assessment of proposed solutions and good practices, based on international experience and local stakeholder input. e) Review of legal, regulatory, and policy framework to manage, regulate, monitor, and enforce mining-related activities from an environmental and social standpoint, including the institutional framework in which it is applied, and identifying both policy and institutional gaps. f) Assessment of capacity-building needs and development of recommended solutions in the form of an environmental and social Action Plan for implementation during the project. The Action Plan will specify measures for improving the environmental and social management of the mining sector to be implemented within each relevant project component, including a timetable linked to progress in other project activities. The SESA TOR is expected to include implementation of those aspects of the Action Plan which may confidently be predicted during preparation and appropriately implemented by the SESA consultant team.

59. Within MNREE, both the Environmental Affairs Department (EAD) (which has oversight of national EIA systems) and the inspectors and environmental specialists within the Department of Mines (DoM) are instrumental in environmental and social management of the sector. Guidelines for EIA and environmental management already exist specifically for the mining sector, but implementation capacity for general environmental management is weak in the country, and mining faces the additional challenge of being a relatively under-developed sector. The only large mining operation to date in Malawi is owned and operated by an Australian company subject to considerable international scrutiny and used to following international environmental management standards. Broader development of the sector will bring the possibility of investments by less experienced or proactive companies, increasing the oversight burden on government. Given the relative inexperience in major mining investments, national capacity to conduct studies is weak, and the project will need to engage international consultants to assist in the preparation of the SESA, as well as detailed technical exchange with the Bank team during implementation.

60. The SESA will assess the needs for strengthening the capacity—financial, technical, and human resources--of EAD and DoM within MNREE, as well as other relevant Malawian agencies at the national and local level. This assessment should ideally also cover the capacity of non-governmental organizations (NGOs)—including civil society organizations (CSOs) and local community groups--that are constructively engaged with the mining sector as local service providers, facilitators, stakeholder representatives, or watchdogs. Some capacity building activities have already been identified following the rapid strategic environmental assessment conducted under the MSR (2009), and others will be identified and developed through the comprehensive SESA process (see discussion in Annex 2 above).

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61. A public consultation event was conducted on January 20, 2011, which involved a detailed presentation and discussion on the content of the SESA TOR with key government, private sector and NGO representatives. Participants recommended that the Terms of Reference should include documentation of regional best practices and case studies, assessment and strengthening the role of the civil society and cover all key areas and minerals for baseline information. A description of the consultation event was annexed to the disclosed SESA TOR. In addition, the disclosure notice published in Malawi provides contact details where further comments on the SESA TOR can be sent up until the start of the procurement process, beyond which, stakeholder feedback will be provided through the SESA consultation processes (see Box 8).

Box 8: Stakeholder engagement during the SESA

a) Stakeholder analysis to identify and describe all key stakeholder groups that have an environmental or social interest in the development of the mining sector, and provide a mapping of interests. It should identify vulnerable stakeholders such as women, youth, and the poor whose voices are sometimes not heard in the policy process, and indicate how SESA preparation will engage them in a manner that is culturally and politically appropriate. b) Stakeholder input to SESA to ensure that the full range of interested stakeholders have ample opportunity to provide information and opinions to the SESA process, including the identification of priority environmental and social problems, the range of possible solutions, and the specific measures recommended for implementation under the project. c) Documentation of stakeholder consultations, including an annex which should specify (i) which stakeholder organizations or informal groups were consulted during which parts of the SESA process; (ii) the forms of consultation and discussion carried out (meetings, interviews, surveys, e-mails, web page comments, etc.), when and where; and (iii) the main concerns and recommendations of the different stakeholder groups.

62. Key to the management of potential downstream impacts will be appropriate sequencing of project activities, such that the identification of risks and establishment of mitigation systems (as described below) do not lag behind the promotion of additional investments in the sector. This sequencing will be laid out very clearly in the environmental and social action plan to be developed under the SESA, and will be closely monitored by the Bank team during implementation, with a need for close involvement of both environment and social specialists as routine members of the Bank implementation support team, as reflected in Annex 5. The project will include the legal remedy of suspension if the Government does not apply standards and measures consistent with international good practice to ensure the environmentally and socially sustainable management of mining operations.

63. The EAD is represented on the PSC, on the Project Preparation Taskforce at preparation and on the PMT through a designated officer.

64. As the project is national in scope, it will involve a broad range of stakeholders, including several government agencies, NGOs and private sector organizations linked to current and potential mining activities. From an environmental and social perspective, key stakeholders include local communities in area currently or potentially impacted by mining, local and downstream natural resource users, Forestry Department, Department of Parks & Wildlife, and NGOs representing impacted social groups and environmental concerns. The environmental and

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social action plan developed under the SESA will incorporate stakeholder engagement activities over the course of the project.

65. The Project will also liaise with other Bank activities in country like the Shire Basin Project, as well as other donors as needed to benefit from relevant experience in environment and social monitoring in Malawi.

(iv) Monitoring & Evaluation

Data collection 66. The PMT will be responsible for results monitoring and evaluation (M&E) in accordance with the indicators and milestones included in the Results Framework (Annex 1). One member of the PMT will be responsible to collect data from relevant government departments and prepare the relevant section of the annual Project Monitoring and Procurement Report.

67. M&E costs, like baseline studies or follow-up surveys, will be covered under component D of the Project. In addition, other components of the Project will finance activities that will improve data collection, including sub-component A-5 that will collect a lot of information through the SESA and sub-component B-4 that will develop tools for mineral revenue forecasting.

68. All details regarding M&E, including roles and responsibilities, are provided in the Project Implementation Manual (PIM).

Reporting

69. Financial Management and Procurement planning and reporting will follow Bank standard and guidelines and include quarterly IFRs (with a Procurement Annex), annual External Audit, and annual Procurement Plan in format detailed in the corresponding sections of the PIM and the PAD.

70. In addition, the Bank’s implementation support team will be able to monitor progress and contribute to orienting the Project through:

(a) the Annual Project Monitoring and Procurement Report: this technical report will be prepared by the PMT and will detail progress in meeting the main indicators and targets, document successes and explain delays. It will also include a full section on the procurement transactions achieved during the year.

(b) the Annual Work Plan and Budget: this document will be prepared by the PMT and submitted for approval to the Bank implementation support team. At their request, the EU team will also provide input.

71. A comprehensive mid-term review of the project will be undertaken approximately two years after the start of implementation. This will provide an opportunity for major mid-course adjustments, such as reallocation of funds.

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72. The table below summarizes the key planning and reporting documents that will help monitor project progress and results:

Table 5: Project Planning and Reporting Documents Type of report Period Due date Remark

Planning (ex ante) Work Plan and Budget Annual

(July 1 – June 30)

May 15 Prepared by Project Management Team;

Procurement Plan Annual (July 1 – June 30)

May 15 Prepared by Project Management Team; First one covers 18 months (February 23, 2011);

Reporting (ex post) Interim Financial Reports (IFRs) with Procurement and Physical progress (including M&E) Annexes

Quarter Nov 15; Feb 15; May 15; and August 15

Prepared by Project Management Team;

External Audit Annual (July 1 – June 30)

Dec 31 Prepared by Auditor General’s office; Comprises a Management Letter prepared by MNREE. First one can cover up to 18 months.

2. Role of Partners

73. Arrangements for the co-financing of the Project by the European Union are in the process of being finalized. A grant of Euro 4.1 million to support mining sector development forms part of the 10th EDF allocation, under an agreement with the Government to be signed in March 2011 (10th EDF Regional Integration, Trade & Investment CSP). This co-financing will be administered by the World Bank according to the terms of an Administrative Agreement, through a dedicated Trust Fund that is under negotiation. The EU Grant Agreement11

74. The co-financing arrangements will be structured to pool the EU funds with the IDA credit in one Designated Account. For all activities, disbursements will be from both sources according to a fixed rule: 82% from IDA, and 18% from the EU Trust Fund (see Disbursement Section).

with the Government will be signed prior to effectiveness of the IDA Credit.

75. World Bank communication, payment and control mechanisms will apply under the provisions of a Framework Agreement in place between the EU and the World Bank for trust fund management at that time.

11 EU Grant Agreement means the agreement to be entered into between the Government and the World Bank (IDA), acting as trustee of the co-financier providing for the EU grant.

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Figure 2: Project Co-financing Arrangements

76. Some other donors already or are contemplating support of the Government’s mining sector reform agenda. In 2009, DfID made funds available to MNREE to (i) engage the services of a mineral law expert to assist MNREE review the Mining Act of 1981 and prepare a new law and (ii) organize a program of NGO outreach on mining sector development issues. Both activities were commenced in 2009 and were ongoing in 2011. No additional commitment has been made by DfID.

77. The Government of France entered into an agreement with the Government of Malawi, dated January 11, 2011 (“Debt Relief and Development Agreement”), under which funding will be available to MNREE to support programs of (a) geological field mapping and (b) strengthening institutions working in this area. Under the agreement, US$13 million equivalent will be granted in accordance with a Framework Agreement and an agreed Programme over a period of five years, linked to periodic instalment payments made by the Government. The activities to be funded by these payments are yet to be agreed in detail.

78. The Japanese International Cooperation Agency (JICA) is evaluating a possible program of support to GSD. The definition of its size, scope and details is likely to take place only after March 2011.

79. MNREE convened a meeting of donors, including the World Bank, the EU, the Embassy of France and JICA in January 2011 to coordinate technical discussion of donor support programs. The objective of MNREE is to avoid duplication. The World Bank and the EU seek assurances that any agreement with another donor to support MNREE will be designed to complement activities being funded by the Project.

World Bank

Government

EU

Project Administrative

Agreement

General Framework Agreement

Grant Agreement

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Annex 4:

Operational Risk Assessment Framework (ORAF) Negotiations and Board Package Version12

Project Development Objective(s)

The Project Development Objective is to improve the efficiency, transparency and sustainability of mining sector management.

PDO Level Results Indicators:

1. Days taken to issue mineral rights 2. Annual public reporting of mineral sector tax revenues 3. Percentage of mining operations subjected to environment certification

Risk Category

Risk Rating Risk Description Proposed Mitigation Measures

Project Stakeholder Risks

Low Differences of opinion on reforms to strengthen mining sector governance and spur sector growth can potentially occur. The public could have doubts that the country is benefiting from mining giving rise to reputational risks to WBG.

The project will continue to undertake broad consultations with stakeholders and civil society until effectiveness and regular updates during implementation. Component A-1 will assist the Government to set up the structure and support arrangements for continuous and formalized dialogue among stakeholders on mining policy issues and oversight of policy implementation, to include design of MNREE’s communications and outreach function. The SESA TOR has been disclosed for public comment and the SESA will be conducted on the basis of strong

12 This is the version that should be used for Negotiations and submission for Board Approval.

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stakeholder consultation.

Implementing Agency Risks

Medium-L PROCUREMENT

General procurement and FM capacity in ministries in Malawi is rated rather low “partly comply with Country Procurement Law” The lack of procurement capacity of MNREE could lead to delays, mis-procurement, and other fiduciary risks.

General Support: IDA in collaboration with other donors will continue to provide support for capacity building in procurement. Project Specific: MNREE will be supported during preparation by a Procurement Specialist funded by PPA. Before effectiveness, the Ministry’s Procurement Officer will attend short courses in procuring consulting services as well as goods run by ESAMI within the region in order that he should be knowledgeable in Bank procedures, including the use of PROCYS. At implementation, in the event that MNREE has yet to fill the vacant Principal Procurement Officer post, an experienced Procurement Specialist will be recruited for up to 18 months to mentor and coach the current Ministry staff in the use of Standard Bank procedures and processes. Substantial progress on procurement filing, record keeping, and contract monitoring are expected as a result of training on records management during preparation.

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FINANCIAL MANAGEMENT Lack of capacity and experience could create additional delays in disbursement and other financial risks like ineligible expenses. High staff turnover. At the moment, MNREE can only account for and report on funds using Excel-based spreadsheets on a cash basis, which can prompt errors.

Training on FM and Disbursement will be provided to the MNREE accounting staff prior to and during project implementation. The Project Management Team includes a Project Accountant and a Senior Accounting Assistant On a temporary basis, MNREE will account for and report on funds using Excel-based spreadsheets on a cash basis, with registers kept to track liabilities and assets. Project accounts will then either be included in IFMIS or, in the event of prolonged delay in using IFMIS for separate projects, the project will finance the installation of separate accounting software, which will be of standard quality and used until IFMIS is available. At implementation, in the event MNREE has not sufficiently strengthened the staff capacity, the project may finance a Financial Management Specialist who will be recruited for up to 18 months to mentor and coach the current Ministry staff in the use of IFMIS or the accounting software financed by the project, as well as Standard Bank procedures and processes and reporting obligations. Standard Covenants incl. maintaining adequate financial management system and records; submitting to the Bank quarterly IFRs and annually externally audited financial statements.

Project Risks

• Design

Low Risk of inappropriate design leading to technical ambiguities, lack of ownership, implementation support challenges and need for restructuring.

Joint needs assessment took place during preparation with Government and donors.

• Social and Environmental

Low No significant physical impacts are expected from project activities.

The project is rated environmental category B; OP 4.01 is triggered. Terms of Reference for a full Strategic

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Environmental and Social Assessment (SESA) were prepared and disclosed for public comment.

• Program and Donor

Medium-Likelihood

Growing interest in support to mining sector development could risk poor donor coordination. Parallel donor funding could lead to complexity and inter- dependency.

Use of Energy and Mining Sector Working Group to enhance coordination between Government and donors. EU support to Government to be organized as co-funding of Bank TA project, with pooling of funds. Geo-data acquisition and management project component designed to have no dependency on support provided by other donors. Donor coordination mechanism expected to avoid overlaps and increase synergies (first meeting took place during preparation) .

• Delivery Quality

Medium-Likelihood

Risk of slow implementation due to low absorptive capacity of beneficiary institutions.

Project implementation scheduling does not front-end load delivery of capacity building. Some early stage activities (airborne geo-data survey and SESA) are not constrained by absorptive capacity limitations. Sustainability assessments will be conducted periodically as part of project M&E, leading to design modifications if needed.

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Overall Risk Rating at Preparation

Overall Risk Rating During Implementation Comments

Medium-Impact Medium-Likelihood

This is a relatively standard mining technical assistance project which is designed to address gaps in sector management frameworks and lack of institutional capacity in a country with a fast emerging mining sector. It draws on experience from several similar projects implemented in the Africa Region in dealing with reputational and safeguards risks. Project implementation using country systems rather than a PIU poses particular risks, necessitating several mitigation measures to safeguard Bank fiduciary interests.

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Annex 5: Implementation Support Plan

Strategy and approach 1. In the course of project implementation, the World Bank will provide the necessary support to ensure the achievement of project objectives. Bank team members will be based both in Washington and Lilongwe. Detailed inputs from the Bank team are outlined below: • Technical inputs- Specialized expertise in mining policy, governance, geology, and mining regulatory matters among others will be needed for supervision. • Fiduciary aspects- Regular input and training will be needed on procurement, financial management, and disbursement. • Safeguards- Inputs from an environment specialist and a social specialist will be needed, even though the project’s social and environmental impacts are negligible. This is because of the project’s involvement in a Strategic Environment and Social Assessment (SESA) as well as capacity building in EAD within MNREE. • M&E- Support to the design and implementation of Monitoring & Evaluation plan might involve specialized Bank staff (e.g. for the conceptualization of a satisfaction survey). 2. Formal supervision and field visits will be carried out semi-annually. Key milestones will be the review and approval of the Annual Work Plan and Budget. ISR will be updated on the basis of the findings of those missions. EU team will be involved in that process at their request as specified in the Administration Agreement. 3. Coordination with other donors will be ensured notably via the Energy and Mining Sector Working Group (EMSWG) chaired by MNREE through the Principal Secretary. Implementation Support Plan 4. The main focus of implementation support is summarized in the table below.

Time Period Focus Resource estimate per year in

staff-weeks Partner Role

First twelve months

Technical and procurement review of bidding documents, training Procurement Specialist(s) 4

FM supervision FM Specialist 4 Environmental supervision Environmental Specialist(s) 4

Social supervision Social Specialist 3

Stakeholder engagement, public information strategy etc Communications Specialist 2

Project supervision Snr Operations Officer/Mining Specialist 6

Team leadership and coordination TTL 8

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Next 48 months Procurement/contract management Procurement Specialist(s) 3

Financial management - Disbursements, accounting and reporting FM Specialist 3

Environment and social monitoring Environmental Specialist(s) 3

Stakeholder engagement, public information etc. Communications Specialist 1

Project supervision Snr Operations officer / Mining specialist 6

Task leadership TTL 8

5. The skills mix required per mission is highlighted below:

Skills Needed Number of Staff Weeks Number of Trips Comments Procurement Specialist 4 first year, 3/y after N/A Local FM Specialist 4 first year, 3/y after N/A Local Environmental Specialist 4 first year, 3/y after 2 first year, 1/y after Social Specialist 3 first year, 1/y after 1 first year Tbc depending on needs Communications Specialist

2 first year N/A Local

Snr Operations Officer/Mining Specialist

6 per year 2/y

TTL 8 per year 3 first year, 2/y after 6. The implementation support budget estimate is therefore US$150,000 for the first year and US$120,000 for the following years. 7. The main donor partners are listed below:

Name Institution/Country Role EU European Union Co-financier (USD 6 million equivalent) French Cooperation France Parallel financier (USD 13 millions equivalent

allocated mainly to field mapping) IMF International Monetary

Fund Budget and revenue management support

JICA Japan Assistance to GSD (limited to one TA) DfID United Kingdom Technical assistance on mining law (limited to

one consultant)

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Annex 6: Team Composition

World Bank staff and consultants who worked on the project:

Name Title Unit

Bryan Christopher Land Senior Petroleum Specialist SEGOM Ekaterina Mikhaylova Senior Mining Specialist SEGOM Remi Pelon Mining Specialist SEGOM Brian Mtonya Senior Private Sector Specialist AFTFE Stephen Ling NRM & Environment Specialist AFTEN George Ledec Lead Ecologist AFTEN Paula Lytle Senior Social Development

Specialist AFTCS

Steven Mhone Procurement Specialist AFTPC Trust Chimaliro Financial Management Specialist AFTFM Marjorie Mpundu Senior Counsel LEGAF Nneoma Nwogu Counsel LEGAF Jose Janeiro Senior Finance Officer CTRFC Annie Kaliati Jere Team Assistant AFMMW Grace Ingrid Chilambo Team Assistant AFMMW Victoria Bruce-Goga Team Assistant SEGOM