The government should increase its allocation to geological research to woo more foreign direct investment in the mining sector, the World Bank has said.
In its latest report, “The Rwanda Economic Update,” which has a special section on mining, the Bank states that detailed and publicly available geological knowledge will play a leading role in attracting future exploration investment for eventual mine development.
“The government’s commitment to invest $2 million (about Rwf2.4 billion) per year, on average, in potential target areas from the national budget is well noted, and should continue to be supported, perhaps even through development partners,” Rachel Perks, the Bank’s mining specialist, said yesterday while presenting the report to government officials, donors and economists.
“However, it is likely that without any significant new discoveries, the size of the mining sector in Rwanda will remain limited.”
The report urges government to increase mining revenues and rethink revising tax model for the smaller mining operators, including cooperatives, as well as to improve Rwanda Revenue Authority’s capacity in administering taxation policies and collect revenues in the sector.
“The increase in revenue benefits from further financial receipts will require clear rules, guidelines, and procedures for retrocession, if at all, of mining revenues to the provinces, districts, and sectors, and accountability for their use by sub-national authorities,” Perks said.
“The government should in particular assess how small-scale operators and cooperatives do, or do not, benefit from legislation and practices geared toward development of small and medium sized enterprises.”
Michael Biryabarema, the director-general for Geology and Mines at Rwanda Natural Resources Authority, said the sector has greatly improved over the years and follows international regulations, on top of implementing better tax procedures.
“A new royalty tax piloted and introduced since September 2013 to date has improved the taxation procedure of the sector. Between September 2013 and June this year, royalty tax on mineral exports has fetched about Rwf3.4 billion,” Biryabarema said.
“World Bank’s review is rich and welcome. We need to take a long term view of the production volume in order for us to get a proper explanation of what needs to be done.”
On top of adopting a new mining law in June this year, Biryabarema also said that a mining faculty will soon be opened at the University of Rwanda, to enhance research in geology and serve the human resource needs of the sector.
“The issue of building capacity in the public sector is on, but it also lies greatly among the miners. So there is a lot of sensitisation and on-the-job training being carried out to equip the sector operators with the necessary knowledge and tools,” he said.
Cassiterite, coltan, and wolfram are Rwanda’s principle minerals. The sector directly employs more than 33,000 people, mostly rural dwellers who depend on small-scale mining for a living.
Mining fetched $228 million from 8,100 tonnes of mineral exports in 2013, roughly translating into 40 per cent of the country’s total exports.
However, at the beginning of this year, much as mineral volume increased, it decreased in value by 18.6 per cent owing to poor global prices.