Source: Mines and Minerals Bill to curb externalisation – Sunday News August 28, 2016
Roberta Katunga, Business Senior Reporter
MINING companies operating in Zimbabwe will be required to bank all their proceeds with local financial institutions as a way of dealing with rampant externalisation of proceeds.
According to the recently gazetted Mines and Minerals Bill, one particular clause states that every holder of a mining right or title shall, when conducting financial transactions relating to its mining activities, utilise Zimbabwean financial institutions and that any person who contravenes this is guilty of an offence liable to imprisonment not exceeding 20 years.
Last week the Chamber of Mines of Zimbabwe said it would convene to deliberate on the Mines and Minerals Bills with chief executive officer Mr Isaac Kwesu saying the miners’ collective body had not yet met to give their viewpoint of the Bill.
“We are yet to meet as the Chamber of Mines and only then can we give our opinion of the Bill. It is not yet law,” he said.
Buy Zimbabwe chief economist Mr Kipson Gundani said enforcing miners to bank locally would aid oil to the local economy as it would improve circulation of money in the economy.
“If you look at why most resource rich African countries are poor, it is because of the resource curse. The biggest investors in mines are foreign; they sell and keep money offshore. What they leave here is environment degradation, leaving Africa poor,” said Mr Gundani.
He said it was important for those who exploit local resources to bank locally to benefit the economy.
Economist Dr Bongani Ngwenya said there was a strong belief that most companies were externalising money from the country hence the liquidity challenge being experienced.
He said by putting it into law that miners should bank locally, it was a way of plugging out the leakages.
“Based on the prevailing crisis of cash shortages, that clause in the Bill is justifiable. Under normal circumstances, in a free competitive economy which is open enough for potential investors, such policy measures can become counter-productive but at the moment this is what the country needs,” said Dr Ngwenya.
He said externalisation of revenues was a serious problem but added that this might further compound the international community’s perception of Zimbabwe being an unfriendly investment destination.
COMMENTS
Business would be happy to put their money in banks as long as their money is not stolen.
If it is not stolen, you can always withdraw what you put in. This is how banking works in other countries.
You can always wire out the money to third parties – the US dollar is accepted globally.
If however the money is stolen, then if you deposit $1,000 on Monday, you may not be able to withdraw it on Friday. Why would you use a bank that did not let you withdraw your own funds – what is the purpose of such a bank?
The only threat of externalisation comes from the corrupt politicos