By Business Reporter
ZIMBABWEAN gold production output has potential to reach 100 tonnes per annum, a move expected to see the yellow metal making a significant contribution to government coffers through exports.
An investment of $900 million is required for Zimbabwe to reach the targeted yearly output production of 100 tonnes.
According to Persistence Gwanyanya, a banker, financial and economic expert who is also founder of Percycon Advisory Services, ‘Gold has potential to increase to 100 tonnes, which is equivalent to our annual budget of US$4 billion.’
In his last budget statement, former Finance and Economic Development minister Patrick Chinamasa outlined a cocktail of measures to reduce budget deficit from the current levels of 14 percentage of GDP to 4 percent by year end and, subsequently, 3 percent.
Gold output in Zimbabwe is projected at 30 tonnes by end of 2018 following an injection of an additional $74 million last year in the gold support scheme bringing the total to $150 million.
Gwanyanya emphasised the importance of Zimbabwe to seek readmission in the London Bullion Market Association (LBMA) as this would increase the country’s ability to trade with global buyers.
Zimbabwe was in 2007 booted out of the prestigious club after gold output plummeted to three tonnes, when the country was at the height of the economic meltdown.
‘Our gold, which is the biggest foreign currency earner is sold to the international market in United States dollar, through the Rand Refinery (SA) as the marketing agent,’ said Gwanyanya, adding that ‘The same goes with tobacco and other four minerals which together with gold constitute more than 80 percent of our export earnings.’
A more effective way to increase foreign currency reserves is through increasing the production of gold and other exportable commodities such as tobacco, chrome, platinum and diamonds.
Said Gwanyanya, ‘Given the commodity nature of the Zimbabwe economy, it is advisable that the new currency is predicated on Currency Board and or Gold Standard to reduce the temptation of overprinting that got us into the second largest hyperinflation in the world in 2008.’
The new Finance and Economic Development minister, Mthuli Ncube, together with Mines and Mining Development Minister Winston Chitando will need to work hand in glove to ensure mining, as a key economic driver, plays a pivotal role in fishing the ailing economy out of the doldrums.
By re-balancing the economy through increase in production and exports and a concurrent reduction in consumption and imports Zimbabwe can easily reintroduce and sustain its sovereign currency. ENDS//