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Zim faces dry forex year

Zimbabwe should brace for a dry year as the coronavirus pandemic enters its deadliest phase yet, hitting the mining sector, one of the country’s leading forex earners, players in the mining sector warned this week.

They project gold’s export receipts to fall further this year. Last year, earnings fell 16% to US$891.5m from US$1.064.5bn recorded in 2019 due to a decrease in gold deliveries in the country.

This year, miners have predicted a worse year due to lockdowns imposed

Chamber of Mines of Zimbabwe CEO Isaac Kwesu said the pandemic was wreaking havoc. 

“The Covid-19 pandemic is seriously affecting production in the sense that some miners have remained at home.

So, it’s a gloomy outlook,” Kwesu said.

Gold Miners Association of Zimbabwe CEO Irvine Chinyenze said the gold sector has a gloomy outlook, given the variables on the ground.

“We have the pandemic on one end which is ravaging the length and breadth of Zimbabwe seriously affecting the production as many miners especially small scale are now fearful of the pandemic and no one is in the mines now despite being given essential services status,” Chinyenze told Business Times yesterday.

“There are inconsistencies in terms of applying lockdown regulations as there are some miners whose workers are denied to pass through roadblocks.”

He said the gold sub sector faces delays in payments and there are some “miners who are yet to receive their October payments”. 

“With the Covid-19 threat and delays in payment, we expect a gloomy outlook of not reaching 19 tonnes we reached last year, unless there is divine intervention and timeous payment,” he said.

Chinyenze said rains have also affected production as it works against the miners as most holes will be filled with water.

Gold remains the country’s most liquid commodity which can be converted into physical United States dollars and can easily be accounted into the fiscus.

Analysts say the expected drop in the performance of gold this year is a cause for concern for Zimbabwe as the government has identified mining as one of the key drivers of economic recovery, alongside agriculture.

However, they said there was need to plug leakages to ensure the country sells its bullion through proper channels.

The decline comes after another leading forex earner, tobacco, also made a subdued performance during the past year, leaving Zimbabwe on the edge of total economic impulsion due to the rising demand for forex in the economy.

Zimbabwe, analysts say, is in a fix as international lenders, who take a cue from the International Monetary Fund, are not willing to extend credit lines to the country due to its high default rate.

It is understood that the “all weather multi-lending institution” Afreximbank is slowly tightening screws. 

With gold and tobacco production plummeting economic analysts predict 2021 to be an even tougher year than last year.

In an emailed response, Reserve Bank of Zimbabwe governor John Mangudya told Business Times gold will remain a key foreign currency generator in the Zimbabwean economy and more will be done this year to ensure the valuable metal performs again, despite a plunge in export receipts. Source – BusinessTimes

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