10 November 2017

Zimbabwe: Keep Inquisitive Eye On Gold Movement


Reports indicate that the country's exports have shot up to $4 billion as at September 29, 2017, with the mining sector outshining other sectors of the economy, raking in a staggering $1,718 billion that represents 68 percent of total earnings. The most intriguing factor is that gold that earned the country $683 million, leads the mining sector. However, the tobacco sector at close to $1 billion, is way above the yellow metal in export receipts, calling for the need to launch some investigations why is it so in spite of millions of dollars the central bank pumps in to support the sector.

The country, therefore, needs to know who is waylaying the money before it reaches out to the artisanal miners, the intended beneficiaries of the money. If it's bigwigs in Government, who are depriving the small scale miners of the money - let's name and shame them -- the country needs upright leaders. Statistics from the Reserve Bank of Zimbabwe (RBZ) show that of the export earnings realised up to September 29, gold raked in $683 million -- representing 38 percent contributions to overall exports.

Gold is the second largest export earner contributing 17 percent after tobacco at 21 percent in export receipts. Gold miners, mainly the artisanal miners' contribution has been on the increase, resulting in Government coming up with incentives such as the $20 million gold facility, which was later increased to $40 million. Indications are that the central bank may further add another $30 million to the facility as it moves towards boosting the country's total gold production and attracting producers to sell their gold at Fidelity Printers and Refiners.

But some artisanal miners claim that only a few are benefiting from the said facilities. They allege the $30 million was disbursed to only 179 miners. From thousands of miners, who deliver to Fidelity, only a minute percentage got assistance. The fact that the artisanal miners claim are not receiving the money, raises questions on who is getting the money on behalf of the miners. The central bank should, therefore, put in place watertight mechanisms to ensure the intended beneficiaries receive the money so that authorities can put the miners' under scrutiny if they do not deliver.

This will also help plug loopholes in the gold sector where an estimated 1 000kg of the precious metal is being smuggled out of Zimbabwe, robbing the country of export revenue. In fact, the 1 000kg are just estimates, the country might be losing more through smuggling of the mineral to other countries.

The decision by Fidelity Printers and Refiners recently to reduce cash payouts to small-scale gold miners by 40 percent, and the rest deposited in their bank accounts, we believe is not meant to hurt the industry. However, some of these extraordinary measures should be taken after a careful consideration because at times they have boomerang effects that will see more gold being exported illegally.

Fears by some players already alleging the move will hurt production and give rise to smuggling of the precious mineral out of the country should not be condemned. Of course, it hurts because before the new arrangement, small-scale miners used to receive 100 percent cash (US dollars) on delivery of the metal to the gold buying firm.

What the cash ended up being used for is debatable. However, under the new payment system as we reported in this paper recently, miners are now getting 60 percent of their earnings in US dollars, while the remaining 40 percent is deposited in bank accounts, we quoted the Zimbabwe Miners' Federation spokesperson Dosman Mangisi, as saying.

Inasmuch as the gold miners should be incentivised by receiving 100 percent of their money from Fidelity Printers in cash, they should behave responsibly by not flooding the money on the illegal market. Otherwise the whole system becomes counterproductive as the money will be used to push the price of US dollars up on the black market, a scenario that triggers the hike of prices of consumer goods produced by some firms that fail to get foreign currency from the RBZ.

Given that gold is a finite resource, it is critical that the country should keep an inquisitive eye on whatever happens to ensure maximum benefits are realised.


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