Establishment of a Sovereign Wealth Fund (MW0014)

1. What problem does the commitment aim to address?
The current economic state of Malawi has made it perennially difficult to invest for future generations. As is the practice now, all government revenue is consolidated in account number one. This includes money realized from the mineral wealth of the country. With the increase in mining investments and operations, there is a need to manage proceeds from the mineral endowment of the country to cater for the needs of both the current and future generations. The Sovereign Wealth Fund (SWF) aims to properly manage and distribute revenues from the extractive sector. An SWF can ensure inclusive and intergenerational wealth management of revenues from the extractive industry. The absence of specific legislation to establish the fund is the key challenge.

2. What are the causes of the problem?
The root cause of this problem is the absence of specific legislation to guide the fund’s establishment.

Commitment Description

1. What has been done so far to solve the problem?
The Government is exploring the most suitable mechanism for an SWF tailored to meet the country’s needs. A concept note for benchmarking countries with established SWFs has been developed. The report on the benchmarking process will inform the next steps in the implementation of the commitment. The report will also inform the feasibility of the establishment of an SWF. To strengthen capacity regarding the operationalization of the SWF, several capacity-building sessions have been planned, including training sessions for stakeholders.

2. What solution are you proposing?
This commitment will:
(a) Enact specific legislation for establishing and managing the SWF.
(b) Review existing legal frameworks, like the PFMA or other financial instruments, to ensure harmonization.
(c) Establish an SWF.

3. What results do we want to achieve by implementing this commitment?
This commitment aims to achieve the following:
(a) Secured a stable and transparent mechanism for managing extractive sector revenues.
(b) Established a legal and institutional framework for the SWF, including governance and oversight measures.
(c) Ensured equitable use of mineral wealth to benefit both current and future generations.

Commitment Analysis

1. How is this commitment relevant to MW2063?
Malawi’s long-term vision is to make mining a key component of industrialization and sees the sector having tremendous potential to develop and support the inclusive wealth creation agenda. Malawi 2063 First 10-Year Implementation Plan’s (MIP-1) Theory of Change envisions mining, tourism, and agricultural sectors as key drivers to a manufacturing, industrial-based economy. It also promotes the acquiring and bolstering of technical skills in mining to keep up to date with market requirements. Such specialized skills in mining have to be developed to support mining as a strategic sector and require adequate and reliable sources of funding. Thus, Malawi seeks to increase the percentage contribution of mining to domestic revenue from 1.2 percent in 2021 to 10 percent in 2030. The country also targets increased value addition in mining and an increased percentage contribution of the extractive industry’s exports from a baseline of 1.7 percent in 2017 to 12.7 percent in 2030.

2. How will the commitment promote transparency?
The SWF will operate under legal and governance frameworks that require publication of revenue flows and investment decisions. Mining sector platforms, such as the MWEITI website, will be used to track and disclose fund performance, and coordinated engagement with MDAs, CSOs, and the private sector will ensure visibility across the mining value chain.

3. How will the commitment help foster accountability?
Accountability mechanisms, including independent audits, oversight committees, and public reporting requirements, will accompany the fund’s establishment. Coordination between MWEITI, Parliament, and other governance actors will ensure the fund is used according to its mandate. Legal safeguards will protect it from arbitrary reallocation, and CSOs will play a key role in monitoring implementation.

4. How will the commitment improve citizen participation in defining, implementing, and monitoring solutions?
The commitment encourages public involvement through inclusive consultations and proactive disclosures of reports and information on the SWF model and transparency frameworks. Civil society and private sector actors will participate in stakeholder engagement processes, ensuring that the fund reflects national priorities and public interest. Once operational, the fund’s performance will be subject to public scrutiny through MWEITI reporting and CSO engagement.

Commitment Planning

Milestones | Expected Outputs | Expected Completion Date

Benchmark of SWF Model | Results presented, and the best fit model for Malawi selected | March 2026

Review and enact laws governing SWF | Specific SWF Bill and regulations passed | December 2027
Review existing legal frameworks | PFMA or other financial instruments reviewed for harmonisation | December 2027