• Zimbabwe estimates gold smuggling costs its economy over R21 billion in lost revenue per year.
• Most of the gold is siphoned off by informal small-scale miners who sell their findings to illicit gold traders.
• Gold miners were legally obliged to sell 40% of their earnings to the central bank at the official exchange rate, but this was later reduced to 20%.

Zimbabwe last year lost around a third of its average gold production to the black market, the national money printer and gold exporter said Tuesday.

The smuggling of gold, Zimbabwe’s top foreign currency earner, is estimated to cost the southern African country $1.5 billion (over R21 billion) in lost revenue per year, according to the International Crisis Group.

Most of the precious metal is siphoned off by informal small-scale miners who sell their findings to illicit gold traders rather than government-appointed officials.

Fidelity Printers and Refiners (FPR) – an arm of the central bank with a monopoly on buying, refining and exporting Zimbabwe’s gold – on Tuesday announced the country had lost around 11 tons of gold to “leakages” in 2020.

The losses were mainly due to payment delays caused by foreign currency shortages that encouraged miners to sell to smugglers instead, FPR’s head of gold operations, Mehluleli Dube, told a parliamentary mining committee.

“We have since put some measures in place, and export incentives to encourage our miners to deliver as much gold as possible,” he said.

Gold miners are usually paid in US dollars, a much more stable and desirable currency than the ever depreciating Zimbabwean dollar.

They were legally obliged to sell 40% of their earnings to the central bank at the official exchange rate.

But that obligation has been reduced to 20% “to lure our miners to bring gold to Fidelity Printers”, said FPR head of finance Peter Magaramombe.

Zimbabwe’s official gold production dropped from a record 33.2 tons in 2018 to just 19 tons last year, mainly due to fewer deliveries from scall-scale miners, the FPR estimated.

It said small-scale miners only sold 9.35 tons of gold to formal buyers last year, compared to 17.48 tons in 2019.

Government officials have been accused of having a hand in the illicit trade and smuggling gold out of the country.

“The allegations appear to be not far off the mark,” said a report by the Southern Africa Resource Watch, a non-governmental organisation, published this week.

“The president’s cronies… are seen as key players in the gold sector,” it noted.

In October, the head of Zimbabwe’s miners’ federation Henrietta Rushwaya was detained with six kilogrammes of gold in her bag just before boarding a flight to Dubai.

Rushwaya’s former driver, Tashinga Masinire, was intercepted on his way to South Africa last month carrying 23 pieces of gold worth $11 million (R157 million).

Source: News24