ZIMBABWE’S anti-corruption unit should step up efforts to tackle illicit gold trade which is being facilitated by key government departments such as the Reserve Bank and the Mines ministry, a report by a regional watchdog says.
Gold, Zimbabwe’s top foreign currency earner, is expected to contribute US$4 billion earnings per annum by 2023, a third of the government’s $12 billion target for the entire mining industry in the same period.
But a report compiled by Southern Africa Resource Watch, titled Decrypting Illicit Gold Trade in Zimbabwe, shows that the growing opaqueness of bullion trade in the country has prejudiced Treasury of millions of dollars.
The report is a preliminary investigation of Zimbabwe’s illicit gold trade, covering activities for the three years from 2017 to 2019. The primary objective of this investigative report is to shed light and to offer a fresh perspective on the nature and extent of the illicit gold trade in Zimbabwe. There are varied estimates, which all point to the fact that illicit gold trade is huge.
According to Home Affairs minister Kazembe Kazembe, Zimbabwe is losing US$100 million each month to gold smuggling.
This adds up to US$1.2 billion per year, a figure more or less equal to Zimbabwe’s total gold export earnings; US$964 million and US$1.3 billion in 2019 and 2018 respectively.
“The Zimbabwe Anti-Corruption Commission (Zacc) must take an active interest in curbing corruption and illicit gold trade, targeting public institutions like RBZ, FPR (Fidelity Printers and Refiners) and ministry of Mines and Mining Development (MMMD), and gold buyers. Players in the artisanal small-scale gold miners feel unfairly targeted and not safe if they officially declare large gold production and sales volumes,” reads the report in part.
“MMMD must strengthen its capacity on record-keeping and collation of monthly gold production data from both large-scale miners and artisanal and small-scale gold mining operations, as required by the Mines and Minerals Act, rather than relying on gold delivery data from FPR.
“The Parliament of Zimbabwe, and particularly the parliamentary portfolio committees on Mining and Mining Development and the Budget Finance and Economic Development, must make a combined inquiry into illicit gold trade, to hold the executive accountable for illicit gold trade players who appear to be untouchable. Special focus must be on the jewellery industry and foreign gold buyers.”
The report shows that although Zimbabwe has the capacity to refine its gold, the state-owned Fidelity Printers and Refiners utilises the Rand Refinery of South Africa for that purpose. Zimbabwe officially exports its gold via South Africa’s Rand Refinery.
“Thereafter, what happens is that the proceeds are split between paying securitised debts and foreign currency earnings flow back to Zimbabwe. However, the emergence of Dubai as a main gold export destination for Zimbabwe, one that also has approved bullion status refining capabilities, throws into doubt whether all gold exports from Zimbabwe are refined via the Rand Refinery”, the report shows.
In 2016, South Africa was the dominant destination for Zimbabwe’s gold with a 95% share, while the United Arab Emirates (UAE) had a meagre share of nearly 5% among other gold export destinations. From 2016 to 2019, the UAE’s share as a destination of gold exports from Zimbabwe grew phenomenally, accounting respectively for: 22%, 54% and 61% in 2017, 2018, and 2019.
This period of growing prominence of the UAE as a major gold export destination, surpassing South Africa in 2018 and 2019, coincided with increased gold deliveries from artisanal miners, which surpassed gold deliveries from large-scale miners in 2017, 2018 and 2019.
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