Zimbabwean exporters will be rewarded for exporting more, under a raft of new incentives announced by Finance Minister Mthuli Ncube on Monday.
Exporters, including miners, currently keep 60% of their foreign earnings in hard currency, while 40% is sold to central bank at the official exchange rate. Gold miners have said this leaves them without enough to cover their expenses, many of which are in US dollars.
Ncube has turned down their pleas and kept the 60% threshold in place, only announcing “incremental” incentives under which a company that exports above its monthly average can keep 80% of what it earns from that increased portion.
“In order to encourage gold production and deliveries to Fidelity Printers and Refiners (FPR), gold producers who deliver gold quantities above their average monthly deliveries shall be entities to a retention level of 80% on the incremental portion of the gold delivered to FPR,” Ncube said.
Companies that list on the Victoria Falls Stock exchange get to keep 100% of their incremental exports.
Gold producers have previously pushed to be allowed to sell their own gold abroad. In 2019, Canadian company b2Gold abandoned a bid for Shamva mine after failing to get assurances that it could export its own gold.
The new plan does not give in entirely to this demand, but says large scale miners that qualify for the 80% threshold can now directly export the incremental portion of their gold, the earnings from which they can use to secure credit offshore.
In January, central bank cut the amount of forex that exporters can earn from 70% to 60%. In response, the Chamber of Mines, in a letter to the Ministry of Finance in February, said miners would have to cut production as the bulk of their expenses were in US dollars.
Said the Chamber: “A snapshot survey and submissions received from mining houses demonstrate that on average 60% of gross export proceeds are now taken by government departments and agencies (RBZ, Taxes, ZESA etc) leaving inadequate forex resource for the mining firms to sustain the operations.”
Treasury’s new incentives are structured differently from previous subsidy programmes blamed for stoking inflation. In January last year, central bank dropped the gold support scheme, under which gold mines were paid 25% of the gold price for each delivery of gold to Fidelity. The incentive was paid out in Zimbabwe dollars at the prevailing official exchange rate.
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