Zim Illicit gold trade worsened post-Nov 2017: Report 

Source: Zim Illicit gold trade worsened post-Nov 2017: Report – #Asakhe – CITE

Official gold deliveries from artisanal and small-scale mining eclipsed gold deliveries from large-scale mining in Zimbabwe but lack of transparency and accountability created huge opportunities for gold losses through under-declaration, the latest report by Southern Africa Resource Watch (SARW) has revealed.

The report also indicates that policymakers are aware of some of the key actors behind the illicit gold trade, but arresting them has not happened.

SARW is a preliminary investigation of Zimbabwe’s illicit gold trade, covering activities for the three years from 2017 to 2019 and sheds light on the nature and extent of the illicit gold trade in the country.

The latest report notes that over the past three years, the state of Zimbabwe’s gold industry transformed rapidly.

“The official gold deliveries from artisanal and small-scale gold mining eclipsed gold deliveries from large-scale mining; the United Arab Emirates emerged as a leading gold export destination; the shrinking of the dominant role that South Africa used to play, malignant currency woes impacted negatively on the official gold deliveries because foreign currency retention thresholds eroded value for gold producers and the discordant role of foreign gold buyers and widespread violence in the ASGM sector,” said the report.

Interestingly, these key developments in the gold industry also coincided with the changes in government in November 2017.

“New actors assumed the reins of government, and these actors had a longstanding but allegedly murky history of involvement in the illicit gold trade,” said the report.

SARW attempts to come up with estimates of gold production, gold smuggled out of Zimbabwe and gold smuggled into the country considering that the mineral provides propulsive growth to the country’s mining sector.

However, the government institutions involved in gold production and trade have lowered the bar for the illicit gold trade to flourish.

“A focus on the nature and extent of illicit gold trade in Zimbabwe is very timely since the country is basing its plans for socio-economic recovery and growth in the mining sector. Gold is expected to contribute US$4 billion earnings per annum by 2023, a third of the US$12 billion targets for the entire mining industry in the same period,” said the report.

Having a ‘high-resolution’ picture of the illicit gold trade is, without doubt, a mountainous challenge but nuggets of information are available for policy-makers to come up with well-sculptured policy measures to curb illicit gold trade in Zimbabwe, the report said.

“The culture of transparency and accountability must be fostered for a fighting chance against illicit gold trade. Government institutions involved in gold production and trade have lowered the bar for the illicit gold trade to flourish. It appears that policy-makers are aware of some of the key actors behind illicit gold trade, but tightening the noose around these illicit actors is proving to be elusive,” SARW said.

The report noted how the government announced a new gold trading framework, which sought to weed out foreign gold buyers who were not heavily involved in gold production.

For one to qualify as a large gold buyer, the bar was raised higher and part of the requirements included monthly gold production of at least 50kg of gold per month.

“Another red flag that the Reserve Bank of Zimbabwe (RBZ) raised (that has not led to bringing to book the culprits) involves the arbitrage opportunities exploited by actors in the jewellery industry. Jewellers once had the opportunity to buy gold in RTGS and sell the gold back to Fidelity Printers and Refiners to earn scarce US$, or to export jewellery, earn foreign currency, retain 35 per cent and surrender the rest to RBZ, making a huge profit in the process,” read the report.

“Gold export incentives evidently had a huge collateral impact – illicit gold flows into the country, incentives outweighing tax revenue needed to finance development like royalties, and massive inflation. It is confounding that even the official data on gold production from large scale mining and from the Chamber of Mines of Zimbabwe, refer to gold deliveries as production data.”

The report provides a textured understanding of why the illicit gold trade numbers are elusive and what the government needs to do to redress the challenges.

“Whilst some of the challenges behind illicit gold trade are beyond government control, the picture painted shows that the government can make huge progress to curb illicit gold trade through an enabling gold trading framework that is fair, stable, transparent and accountable.”

This report makes important recommendations to Zimbabwe’s parliament, the anti-corruption agency, the reserve bank and other important role players on measures they could take to create well-sculptured policy measures to curb illicit gold trade in the country.

COMMENTS

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    Mukanya 7 days ago

    How can the culprits involved arrest themselves……!