Mining boom fails to fill Zimbabwe State coffers

ZIMBABWE'S mining boom is failing to translate into significant fiscal gains for Government, with mining royalties contributing only about 3% of total state revenues, the African Development Bank (AfDB) has warned.

The assessment highlights weaknesses in the country's ability to convert its vast mineral wealth into sustainable public revenue, despite the mining sector becoming one of Zimbabwe's largest sources of foreign currency and attracting billions of dollars in investment.

In a report assessing Zimbabwe's development financing options, the AfDB said weaknesses in governance, licensing, contracting, transparency and enforcement were limiting the State's ability to capture value from the extractive sector.

"Mining royalties — typically contributing around 3% of total government revenues — and related taxes remain important fiscal sources, but revenue capture and reinvestment efficiency are weakened by gaps in transparency, licensing, contracting, and enforcement," the bank said.

The finding exposes a widening gap between the scale of Zimbabwe's mineral economy and the amount of revenue being captured by the Government to finance public services and development.

Zimbabwe's mining sector has expanded rapidly in recent years, with gold, lithium, platinum and other minerals driving export earnings and attracting significant investment.

The sector grew by about 7% in 2025, up from 2.3% in 2024, while mineral export earnings surged to a record US$8.5 billion from US$5.9 billion the previous year.

Government expects the sector to grow by about 10% this year, with gold production projected to reach approximately 55 tonnes.

However, the AfDB cautioned that increased production and exports alone would not automatically translate into stronger public finances.

The bank said Zimbabwe's limited access to both concessional and market-based external financing made improving domestic resource mobilisation increasingly important.

It argued that the country could use its natural capital to attract private and international investment through resource-backed infrastructure arrangements, structured public-private partnerships in mining and agriculture and blended-finance instruments linked to sustainable value chains.

Such mechanisms, however, would require credible governance and transparent revenue arrangements to ensure that they do not expose the fiscus to additional risks.

"Natural capital linked financing will crowd in meaningful private and climate finance only where project pipelines are credible, revenue capture is transparent, and risk allocation frameworks are strong enough to prevent resource backed financing from becoming another channel of hidden fiscal exposure," the AfDB said.

The bank also identified opportunities in carbon markets, climate finance and biodiversity-linked instruments, particularly in forestry, land restoration and renewable energy.

But the AfDB warned that simply leveraging Zimbabwe's natural resources would not resolve the country's financing constraints without reforms to the institutions responsible for managing those resources.

The assessment comes as Government increasingly seeks to position the country's mineral endowment as a foundation for infrastructure development, investment and economic transformation.

The challenge, however, extends beyond increasing mineral production to ensuring that a greater share of the value generated from extraction remains in Zimbabwe and is converted into productive public investment.

The AfDB said Zimbabwe needed credible project pipelines, stronger public financial management systems and clear risk-allocation frameworks if natural capital was to become a sustainable source of development finance.

The bank's warning therefore points to a policy shift that could become increasingly important for Zimbabwe: moving beyond attracting investment into the mining sector towards strengthening the State's capacity to transparently capture and reinvest the wealth generated from the country's mineral resources.

With conventional financing channels constrained, the AfDB sees Zimbabwe's natural capital as a potentially important source of development finance — but only if the governance and institutional weaknesses limiting revenue capture are addressed.