Zimbabwe weak policies major contributor to gold smuggling

By Mona-Lisa Dube

HARARE – The recent high-profile case in which the leader of Zimbabwe’s small scale gold miners was arrested at the country’s international airport while allegedly trying to smuggle 6kg of gold to Dubai has trained focus on leakages of the precious metal, with observers saying it points to weaknesses in national mineral trading policies.

The case of Henrietta Rushwaya, president of the Zimbabwe Miners Federation, is still pending before Harare’s courts. She was intercepted at Robert Gabriel Mugabe International Airport with the gold in her hand luggage, and immediately hauled before the courts where she awaits trial.

Henrietta Rushwaya
Henrietta Rushwaya (in navy blue attire) arriving at the Harare Magistrates’ court accompanied by detectives. Courtesy of Newzimbabwe.com

The International Crisis Group says in its 2020 Report that Zimbabwe is losing about US$1.5 billion each year through gold smuggling.

According to the Zimbabwe Mining Federation, small scale miners in Zimbabwe contribute more that 50% of gold extraction in the mining sector.  Although there were some policies crafted in the 1990s to formalise the operations of artisanal miners, regulating them has proved difficult due to the sheer numbers of people involved. Statistics from the United Nations Industrial Development Organization suggest that 2 million peoplein Zimbabwe are dependent on artisanal mining, driven into the activity by high unemployment. The lax monitoring has created opportunities for gold smuggling and abuse of the national resource.

From the two mining sites visited, miners indicated that they are not well acquainted with any policies regarding mining and most are not aware of how to actually apply for a mining license.

Other miners bemoaned the tedious bureaucratic process that one has to go through to acquire a mining license which is also too expensive and out of reach for most.

Female Miners
Female Artisinal Miner: Courtesy of Newzimbabwe.com

Government recently gazetted Statutory Instrument (SI) 95 of 2020 increasing mining fees where registering a mining lease and a special mining lease will cost US$25 000 and US$50 000 respectively, further increasing the likelihood of gold smuggling.

This has resulted in the country losing billions of dollars from gold that does not go through the formal channels. The Ministry of Mines and Mining Development says they are working on tightening the screws on gold leakages.

“There are two elements of addressing this issue. Firstly, it’s the inspection of mining operations whereby the inspector can monitor to ensure that all the mining is channelled to the correct sources,” Mines and Mining Development Minister Winston Chitando said in an interview.

“And secondly, there are issues where, as government, we need to reinforce the multi-government approach with other government ministers to supervise (the industry) to ensure that what is mined finds itself to the correct channels,” he added.   

There is only one authorised buyer and seller of gold in Zimbabwe, Fidelity Printers and Refiners (FPR), which is owned by the central Reserve Bank of Zimbabwe. Small scale miners have been mourning over this monopoly, saying it leads to unfair pricing and trading standards.

Gold 1
Zimbabwe Gold : Courtesy of Fidelity Refiners

The miners want Fidelity to pay them entirely in United States dollars to enable to them to sustain their businesses as most of their transactions are in foreign currency.

Currently Fidelity pays the miners at a 70:30 ratio of United States dollars to the local currency, which at the time of writing is trading at $81,73 to the US Dollar.

Irvine Chinyeze, the President of the Gold Miners Association, admitted that some small scale miners are using illegal channels to sell gold blaming it on the lack of consistency by FPR and the unfavourable rates.

“We need these issues dealt with as a matter of urgency. Let’s look at the issues of pricing, let’s look at the issues of remittance. Are they timeous? If someone is in business they will not look for excuses,” Chinyeze said.

He added: “Respectfully to Fidelity (FPR), we understand that there may be challenges that they are facing as a result of Covid-19. But for me I want to put bread on the table for my kids, I need to pay my employees; how do I give them the excuse that I have not been paid? It does not fly!”

Fidelity Chief Executive Fredrick Kunaka acknowledged that payments for the small scale miners had been slow and blamed it on the Covid-19 pandemic despite this having been an issue even in the past few years before the pandemic hit.

“The Covid-19 pandemic has had hampering effects on business operations across all sectors of the economy. Our industry has also not been spared,” said Kunaka.

zimbabwe gold

“Flights coming in with United States dollars to pay miners were not flying in frequently because of the imposed restrictions resulting in some delays of up to one week. Covid-19 induced restrictions not only affected cash movement but also the movement of gold to the export markets thus worsening the challenges.

“As Fidelity, we always endeavour to pay our clients for all deliveries they would have made. It is unfortunate we have had to delay some payments due to circumstances beyond our control and we wish to apologise for the inconvenience caused to our clients.”

Fidelity also acknowledges that their current gold prices are below the world market at $51,780 per kg while the world price is at $58,793 per kg.

Small-scale miners have been known to prefer selling to middle men who offer higher prices, bypassing Fidelity and creating room for arbitrage.

This story was produced by ZiFM Stereo. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in partnership with The African Centre for Media Excellence. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.

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