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Reserve Bank of Zimbabwe believes measures the apex bank has undertaken to ease debilitating cash shortage and improve liquidity will boost gold production among the small scale miners. The incentive will also encourage remittance of export earnings that were being held in foreign banks instead of being remitted into the country’s banking system to improve availability of cash or liquidity.Although regular payments in cash to small miners for their gold deliveries has been cited as one of the factors that has put pressure on the demand for cash,growth in deliveries will increase gold reserves and in turn earn the country more foreign exchange.
According to the Ministry of Finance and Economic Development, gold deliveries are projected to reach 25 tonnes this year from 18 tonnes last year largely driven by production from the small scale sector.
Dr Mangudya, who has indicated the central bank will introduce various denominations of bond notes to operate alongside other currencies in the multicurrency system to curb outflow of the greenback, said the 5 percent incentive on deliveries will drive output and deliveries from the small-scale gold miners in the country.
But for bigger gold producers, the incentive has been set at 2,5 percent, which still is significant considering the miners get additional income for exports they would have produced after all. The incentive is tantamount to an increase in the price of gold.
Zimbabwe has been losing, potentially, millions of dollars through smuggling of gold as small miners sought better prices outside the country or ran away from authorities, as they were not licensed, until Government decriminalized artisanal gold mining.
New measures to improve liquidity, stabilize the economy and stimulate production, which include incentives on export earners, will jerk forward gold deliveries from small scale and mostly unlicensed miner or gold panners who now threaten outpace bigger, formal and established gold mining companies in the country.
The central bank chief believes the incentive would put paid to the practice of smuggling bullion, as external buyers on the black market would not be able to match earnings for local deliveries.
This, the Governor contends, will incentivize small scale miners to deliver their gold to Fidelity Printers and Refineries, which is expected to see the share of small miners contribution to annual gold output increasing from the current 40 percent to about 50 percent.
“We are saying if you are going to earn $40 000 if you bring it to us, will give you, apart from split into those currencies (USD, Euro, Rand) for diversification and concentration risk, over and above the $40 000, the miner gets 5 percent of what is due to them.
“Five percent incentive is a lot, banks outside the country cannot pay that much, they may pay up to 2,25 percent so who would keep their money say in the UK when they can earn 5 percent.
Dr Mangudya said the gold and export incentive is a performance based system scheme, which will motivate those stashing foreign currency outside the country’s borders to bring the money back home.
Online Reporter