The Reserve Bank of Zimbabwe (RBZ) says it is making moves to plug loopholes in the gold sector after uncovering cases of large-scale producers funneling gold through small-scale channels to sidestep foreign currency retention limits, a practice that has exposed weaknesses in current policy framework.
The revelations come as the central bank has temporarily shelved plans to grant artisanal and small-scale miners a 90 percent foreign currency retention threshold, citing operational and banking constraints.
Under the proposed system, small-scale miners were to receive 90 percent of their proceeds in foreign currency – well above the 70 percent retention level applied to large-scale exporters, with only 10 percent paid in local currency.
That gap appears to have triggered unintended consequences.
John Mushayavanhu, RBZ governor, acknowledged the emerging arbitrage.
“We were beginning to see arbitrage activities where large-scale gold miners were now marketing their gold via the small-scale channel, as if they were small-scale,” he said.
“We want to bridge that,” Mushayavanhu said.
The practice effectively allowed bigger players to reclassify output and access more favourable retention terms, undermining the integrity of the system and blurring the distinction between formal and informal production streams.
At the same time, the central bank pointed to practical hurdles in rolling out the new framework.
Fidelity Gold Refinery, the country’s exclusive gold off-taker, reportedly struggled to implement the revised payment structure.
Mushayavanhu said the refinery encountered “implementation challenges” that disrupted a smooth transition.
He added that the Zimbabwe Mining Federation had flagged financial inclusion gaps, noting that “some artisanal and small-scale miners are not banked and would require more time to open bank accounts.”
“In this regard, the Committee resolved to temporarily suspend implementation of the policy while appropriate logistics are being put in place, for the smooth operationalisation of the proposed retention requirements,” he said following a Monetary Policy Committee meeting.
While framed as a temporary measure, the suspension has cast a spotlight on deeper structural issues.
The small-scale sector, which accounts for about 65 percent of deliveries, remains both central to output and vulnerable to exploitation as a channel for regulatory arbitrage.
Gold deliveries themselves have been rising, reaching over 3,400 tonnes, up significantly from roughly 2,600 tonnes recorded in the same period last year. Analysts expect output to continue improving, supported in part by expansion projects among major mining firms.
However, experts warn that the dominance of informal players continues to present a major loophole for mineral leakages, one now compounded by evidence of cross-channel laundering between large and small producers.
With international gold prices surging past US$4,500 per ounce amid global uncertainty, the urgency to tighten oversight and align incentives is growing. – TML