Zimbabwe will not need the IMF if it sorts out its gold industry-Eddie Cross

Our national debt is US$11 billion, our budgets for health and education are minuscule when compared to these revenues. In Botswana where the annual sales from their mines are about US$3,5 billion per annum and it’s all hard rock mining, they give their people free education and tax rates are low. The mines are run to the highest standards and two thirds of the net revenues accrue to the State. Here, the benefit to the country was very limited and revenue to the State almost zero.

In the late 1800’s Cecil Rhodes brought one of the top geologists in the world to Zimbabwe. After touring the country, they returned to Bulawayo where this gentleman told Rhodes that the real wealth in Southern Africa was under land to the East of the discoveries at the Witwatersrand. He said that there was a lot of gold in Zimbabwe but it was in pockets and not on the same scale. Rhodes returned to South Africa and bought the farms indicated by the Geologist. They became one of the greatest discoveries of gold in history and created huge fortunes and founded the modern State of South Africa and the Gauteng industrial complex that today generates a third of the total GDP of Africa.

A hundred years later, driven by desperation and the need to make money, thousands of Zimbabweans rediscovered what Rhodes had ignored – the vast areas of gold bearing land – the so called Green Belts, that crisscross the country. They began digging holes and found gold, 2 to 15 grams per tonne. They panned the rivers and found more gold, soon a whole industry sprang up of millers who took in the ore excavated by these miners and produced the coarse gold which could be assayed and sold.

Today we estimate that over 500 000 small scale miners operate. We have no idea what they produce but we know a network of criminal gangs has sprung up and the buyers use whatever means are necessary to control the sale of the precious commodity. If they only produce a gram a week – its gold worth US$1,4 billion. It is clear that the real output is much higher than this. Rumours and gossip from South Africa say that they handle 80 tonnes or more from Zimbabwe at their refineries. The Reserve Bank bought over 25 tonnes last year and this would put gold sales from Zimbabwe at over US$5 billion a year. Bigger than Marange.

Instead of this wealth finding its way to the Miners and their families, they receive only a fraction of the value of their hard earned production. A recent study says they get less than half the world market price. Fortunes are being made, but by who?

Once again our natural wealth is being squandered by corrupt and powerful individuals and we continue to wallow in poverty and hunger. This is a country that is rich in resources, they say that the resources per capita in Zimbabwe are greater than those found in Saudi Arabia – probably the richest country in the world. We are not alone; Venezuela is in a similar situation. Throughout history examples of similar squandered opportunities litter our records.

What is the lesson for us – the lesson is that our problems are solvable and the Presidents goal to make Zimbabwe a middle income State in 10 years, is no pipe dream. It can be done, but only if we stop making mistakes. The chaos in our fuel industry is just because we think we can defy market forces, that is a battle we are losing, can never win.

If we sorted out the gold industry we would have more hard currency than we can spend, we would not need the IMF or to put out a begging bowl, we could sort out our creditors and stand proud again. At the same time, we could do what many other countries have done – lift our people out of poverty and give our children a future.

But it will only happen if we stop making the mistakes of our past, even now.

Eddie Cross

10th June 2020

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