Zimbabwe looking underground for golden economic revival

File: According to official figures, gold production in the first eight months of 2020 rose 10 percent, driven especially by output from small-scale miners. Pixabay/PIX1861​​​​​ 

HARARE - Reeling from decades of economic mismanagement, Zimbabwe is banking on gold to shore up revenue and tackle the upshots of rampant hyperinflation, corruption and coronavirus restrictions.

Global gold prices have surged more than 30 percent this year, topping a record $2,000 an ounce in August as the precious metal became a safe haven for investors in the face of COVID-induced volatility.

The government is eyeing gold as a possible magic bullet for an economy forecast to contract by a tenth this year, according to the International Monetary Fund (IMF).

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According to official figures, gold production in the first eight months of 2020 rose 10 percent, driven especially by output from small-scale miners.    

Plans are under way to reap $12-billion from mining by 2023, mainly through gold.

"Mining will be a leading sector in sustaining high and shared growth," Finance Minister Mthuli Ncube said in a pre-budget statement last month.

READ: Zimbabwe's economy to grow by 7.4% in 2021: minister

Experts warn that the ambitious plans face big hurdles.

One is that miners, particularly small-scale miners, are not happy with the system which requires them to sell their gold to the state-owned buyer, Fidelity Printers and Refiners.

Under regulations set by its owner, Zimbabwe's central bank, a maximum of 55 percent is paid to small-scale miners in foreign currency, with the remaining 45 percent in Zimbabwean dollars, which is notorious for its weakness. 

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"The money is not coming in(to) the formal system," economist Persistence Gwanyanya told AFP.

The government has promised new regulations to stem gold leaving the country illegally.

Source
AFP

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