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The US$10 million Government injection into the small scale and artisanal gold mining sector shows the commitment of the Second Republic towards opening doors for small businesses to both operate and grow.
The injection is divided into two: a US$5 million revolving gold loan fund that small miners can access through a banking channel to buy the sort of equipment they need and US$5 million for six new gold centres to add to the successful single pilot centre where the even smaller-scale and artisanal miners can have ore processed and sold.
There are many advantages to giving gold miners at the bottom of the heap assistance. Much of Zimbabwe’s gold is in tiny deposits, with a few larger deposits, but no great reefs like the Witwatersrand.
For centuries people have been earning a living tackling these small deposits, and we still have a lot for them to tackle.
Many of these deposits can be mined more intensively with moderate or even simple equipment, but are too small for a large company to bother about, so are the sphere of operations of the small and one-person businesses.
The respectable living they can make can be enhanced with some access to machinery, and to modern processing, and this is what the Government move will provide.
Another major benefit is that it can help regularise the large number of miners in the small-scale and artisanal clusters, since it is unlikely that they can access the equipment at gold centres without their licence, and we cannot imagine that a bank, and the loan money will be lent out through a bank following normal commercial regulations, would even want to look at an application form by an unregistered and unlicensed business.
So the Ministry of Mines and Mining Development can both help the miners, and get a handle on them through the registration and legalisation of their operations, no matter how small, reserving mining claims and enforcing for that matter the mining laws, so they do not poach on other claims or damage buildings. They will also have to be careful of environmental damage.
A third benefit will be the elimination of middlemen, those who grab a large percentage of artisanal profits by offering overpriced processing and other services.
Since the licencing costs, and even the costs of filling in their holes after cleaning out the ore, are low, they will make more money using their own equipment bought under the loans, or taking their ore to a gold centre and paying what will presumably be a modest cost-recovery fee.
We have good mining regulations, which are now being streamlined with claims data being moved into databases, and good policies to help small operators and businesses, which is why this particular side of the gold mining industry produces more than the major mines do.
What was missing was the cash to make it more efficient and convert small operators into formal businesses. They already pay tax, when they sell their gold, but the royalty for the small producers is only 2,5 percent rather than the 5 percent the larger mines pay.
Now the cash is there as the Second Republic converts talk into action and builds on what it has already being doing for the past few years.
There has been a lot of criticism of the cowboys in the small-scale mining sector, the sort of people who wave machetes around, take part in gold rushes that threaten the actual existence of school buildings as they dig next to foundations on a rumour, and who move onto the claims of larger mines and sneak down old shafts.
But these are a minority and the police and courts have been dealing with them, making them see the error of their ways and after they have paid their fines, or even done a bit of time behind bars, they are encouraged to join the more law-abiding majority in earning their living, which can be a far more secure living than being a social nuisance constantly dodging the police.
The clean-up of the small-scale gold mining has thus been a dual process, eliminating the crime, while ensuring that there are better and more profitable legal ways of entering and continuing in the business, and scales are now even more strongly weighted in favour of regularisation with the new injection of cash.
This is how so much of our economic growth must be done, bringing the informal sector into the formal economy by offering something better rather than just sending municipal police to raid pavement vendors as Harare City Council likes to do.
If the city council backed its pavement raids with stalls in legal and respectable markets near where customers walk and want to buy, then it could use the dual approach.
But simply banning something does not solve the social problems, and does not solve the need of those in the informal sector to be with their customers and be easily accessible by their customers.
The Government has shown the better way, offering those in the informal and small-scale gold mining significant benefits of formalising and then growing their little businesses, just as in many ways it has done with small-scale farmers, taking them seriously.
Small-scale producers in any sector might not produce much more each than enough profit to feed, house and clothe a family in basic decency, and that is a major gain from mere subsistence.
Nationally when you add all the little bits together you start getting 23,5 tonnes of gold delivered last year, and that is an incredible quantity of gold, with a significant increase expected this year from the small producers, as well as the large mines as their investment over the past few years comes on line with more gold.
Online Reporter