Zimbabwe is losing millions of dollars through side marketing and smuggling of gold, Reserve Bank of Zimbabwe governor John Mangudya has said, as deliveries by small scale miners decline.
Analysts, however, said government policies were promoting illicit financial flows and smuggling of gold outside the country.
Last year, gold output plummeted 31% to 19.052 tonnes from 27.66 tonnes recorded in 2019.
Consequently, export receipts for the yellow metal fell 16% to US$891.5m from US$1.064.5bn in 2019 due to a decrease in gold deliveries in the country.
“Side marketing of the precious metal could have contributed to the decline in deliveries as a result small scale contributed 48.89% of the total deliveries to Fidelity Printers and Refiners (FPR) from 63.19% in 2019,” Mangudya said.
In 2018, Zimbabwe’s gold export receipts reached US$1.33bn but fell to US$1.064bn in 2019 and to less than US$1bn last year owing to unfavourable mining policies, side marketing and delays in payments by the country’s sole buyer of gold, the FPR.
The alternative market created lucrative opportunities for gold miners.
The Covid-19 exacerbated the situation following restrictions to curb the spread of the virus. This severely impacted the supply chain.
Analysts say the poor performance in the gold sub-sector, was a cause for concern since Zimbabwe heavily depends on the earning from the yellow metal. Gold is Zimbabwe’s single largest foreign currency earner after platinum.
Government recently approved the unbundling of FPR into two entities, a gold refinery and printing company.
Mangudya believes the move will help increase gold production given that the gold producers will be involved in the production through their 60% shareholding in gold refining business.
But, Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said the total liberalisation or courting more players was to solution to enhance gold production instead of the consolidation of various players into FPR.
“Despite the pronouncement of partial liberalisation of the gold sector, deliveries plummeted 61% as FPR is still the sole buyer of gold,” Chinyenze said.
Experts said instability in the gold sector has eroded the gold export revenue that the government urgently needs to keep the country’s struggling economy afloat.
Mining experts said the artisanal miners should be given cooperatives legal standing, pay gold producers at world prices and strengthen mining dispute resolution.
A recent mining report said the development of the gold sector was crucial to help turn the fortunes of Zimbabwe’s ailing economy around.
The sector used to contribute more than US$2bn in earnings annually.
But, it has been hit by smuggling. BusinessTimes