Cash-strapped Zimbabwe losing $1.5bn gold a year to smuggling

A report by a global research group estimated that Zimbabwe is losing at least $1.5-billion a year through the smuggling of gold, mainly to traders in Dubai.

Source: Cash-strapped Zimbabwe losing $1.5bn gold a year to smuggling | eNCA

File: Zimbabwe boasts vast gold reserves, and the sector accounts for 60 percent of exports. AFP/David Gray

HARARE – A report by a global research group estimated that cash-strapped Zimbabwe is losing at least $1.5-billion a year through the smuggling of gold, mainly to traders in Dubai.

The figure is higher than the government’s own estimates of $1.2-billion a year lost through the illicit gold trade.

“Estimates suggest that more than $1.5-billion worth of gold leaves Zimbabwe illegally each year, often ending up in Dubai,” said the report by the International Crisis Group.

“Some dealers estimate that illegal exports top official deliveries,” to the country’s formal refinery.

The landlocked southern African country boasts vast gold reserves, and the sector accounts for 60 percent of Zimbabwean exports.

Last month, the head of Zimbabwe’s artisanal and small scale mining federation was arrested with six kilos of gold worth over $360,000 in her hand luggage just before boarding a flight to Dubai.

The gold sector provides jobs to nearly 10 percent of the country’s population, according to the report.

“Amid the collapsing economy, an estimated 1.5 million people have turned to artisanal mining as a safety net,” said the report, adding poverty and the fallout from the COVID-19 pandemic will likely drive more people towards the sector.

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

But the miners are not happy with a payment system which requires them to sell their gold to the state-owned buyer, Fidelity Printers and Refiners.

They are paid 55 percent in foreign currency, with the remaining 45 percent in Zimbabwean dollars, which is notorious for its weakness.

“Zimbabwe’s centralised gold-buying scheme underpays producers, a practice that encourages smuggling and erodes industrial mining profits, leading companies to close mines,” said the ICG.

COMMENTS

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    Dr Ace Mukadota PhD 2 months ago

    RBOZ or Fidelity in ZW pay gold producers about 1500 USD ( some of which is in RTGS) for 1 ounce of gold. In Dubai and South AFrica you can seell it for about USD 1800.
    You dont have to be a PHD from the University of ZW to know why this is happening comrades.
    If you understand it you should become ZW’s Minister of Finance immediately !