RBZ increases gold support facility

Buoyed by sterling performance of the gold sector last year, the Reserve Bank of Zimbabwe (RBZ) has increased the gold support facility to $150 million from $74 million that had been disbursed by December 31, last year.

The sector delivered 24.8 tonnes of gold to Fidelity Printers and Refiners (FPR) last year, up from 21,4 tonnes in the year earlier.

FPR is the gold buying unit of the RBZ.

Last year, small-scale miners outshone large-scale producers after contributing 53 percent of the total deliveries.

In the face of biting shortages of foreign currency to pay for raw materials and fuel resulting in intermittent production stoppages, the RBZ believes financing gold miners and tobacco producers is central to increasing generation of the much needed US dollars.

Presenting his Monetary Policy Statement last week, RBZ Governor Dr John Mangudya, said the gold support facility would be increased to $150 million this year.

"Disbursement under the gold support facility amounted to $74 million. This facility, together with the periodic onsite monitoring by the Gold Mobilisation Technical Committee, greatly contributed to the increase in gold deliveries to Fidelity Printers and Refiners from 21.439 tonnes in 2016 to 24.843 tonnes in 2017, with small scale gold producers accounting for 53 percent of total gold output. . .

"In order to enhance foreign currency inflows from tobacco and gold production, the tobacco input finance facility has been increased from the $28 million disbursed in 2017 to $70 million, while the gold support facility has been increased from $74 million (disbursed to 255 entities) in 2017 to $150 million," said Dr Mangudya.

However, Dr Mangudya said there was need to ensure that obstacles in accessing the facilities were removed so that intended beneficiaries ramp up production.

Zimbabwe Miners Federation (ZMF) spokesman Mr Dosman Mangisi, said artisanal miners welcome the RBZ decision to increase the gold support facility to $150 million saying this would spur miners to work even harder.

"It is definitely a short in the arm for artisanal miners, but we call for a full stakeholder engagement so that this facility is used in a manner that benefits most of the small-scale miners.

"The previous fund did well to help the operations of artisanal miners but there are some who did not benefit because they did not have collateral while in some cases some were illiterate.

"I tell you that if small-scale miners get adequate funds - even small packages of $20 000 - they will acquire critical pieces of machinery such as compressors and increase production," said Mr Mangisi.

The lack of key equipment is understood to be causing a lot of downtime as miners wander around trying to hire from colleagues and some firms.

Gold and tobacco have become key foreign currency earners. At one point in 2016, gold was understood to be generating about $15 million a month. This has seen foreign currency inflows increasing largely because of a surge in export receipts, which grew by 36 percent last year compared to 2016.

Exports are believed to be rising on the back of export incentives introduced in May 2016. Initially, small-scale miners and tobacco farmers were getting 5 percent while large-scale gold miners got 2.5 percent for all their export proceeds, but the RBZ reviewed the figures upwards in October last year.

Dr Mangudya said the export incentive scheme that is funded by bond notes shall be maintained to promote export competitiveness.

The incentive scheme, which was adjusted to 12.5 percent for tobacco growers starting this year shall be tweaked to 10 percent for horticulture, cotton, macadamia and gold producers.