RBZ in U-turn after miners resist gold surrender rule

STAFF WRITER

The Reserve Bank of Zimbabwe (RBZ) has made a dramatic policy U-turn, reversing its foreign currency surrender requirement for small-scale gold miners after fierce resistance from the sector threatened to destabilise the country’s most critical export industry, Business Times can report.

The central bank said it will halt implementation of the 10% local currency surrender rule, effectively restoring full US dollar retention for artisanal miners, barely weeks after introducing the measure to prop up the Zimbabwe Gold (ZiG).

The abrupt reversal lays bare deepening tensions between monetary authorities determined to entrench the local currency and a powerful, largely informal mining sector intent on preserving hard currency earnings.

As first reported by Business Times last week, Zimbabwe’s gold sector was heading for a fresh crisis, with artisanal and small-scale miners signalling open defiance of the surrender requirement, warning it would distort incentives, squeeze liquidity, and ultimately undermine production.

The climbdown followed a Monetary Policy Committee (MPC) meeting held on Tuesday in Harare, where authorities conceded the policy had run into both operational and structural headwinds, including low banking penetration among miners and bottlenecks at Fidelity Gold Refinery, the country’s sole gold buyer.

“In this regard, the committee resolved to temporarily suspend implementation of the policy,” RBZ Governor John Mushayavanhu said.

The now-suspended policy marked a decisive shift from a framework that allowed small-scale miners to retain 100% of their export proceeds in US dollars, an arrangement widely credited with driving output growth and boosting formal deliveries.

Its introduction triggered immediate resistance from the Zimbabwe Miners Federation, which represents artisanal and small-scale miners (ASM) responsible for roughly 75% of Zimbabwe’s gold output.

Miners argued that the measure would distort a sector whose cost structures, from fuel to equipment, are almost entirely dollar-based, creating currency mismatches and liquidity strain.

“We procure most of our inputs in US dollars, so receiving part of our earnings in ZiG creates a mismatch,” the miners said. “There are also concerns about delays in settling ZiG obligations, which could tighten already strained working capital.”

The pushback raised the spectre of declining deliveries to formal channels and a resurgence of gold leakages into informal markets, an outcome that has historically eroded official export revenues.

Gold has emerged as Zimbabwe’s single largest export, generating more than US$4bn in 2025 and accounting for up to half of total export earnings.

Output surged to a record 46.7 tonnes last year, driven overwhelmingly by small-scale miners, who delivered 35.1 tonnes compared to 11.68 tonnes from large-scale producers.

This performance has been central to stabilising foreign currency inflows and underpinning the ZiG. Any disruption to the sector would carry immediate consequences for exchange rate stability and broader macroeconomic balance.

The RBZ had sought to introduce the surrender requirement partly to curb arbitrage, amid concerns that some large-scale producers were routing gold through small-scale operators to evade higher surrender thresholds.

By injecting a local currency component into ASM payments, authorities aimed to tighten compliance while boosting demand for ZiG.

However, the policy collided with the structural realities of Zimbabwe’s mining economy, informal, dollarised, and highly sensitive to incentives.

The central bank’s climbdown, though framed as temporary, underscores the limits of policy enforcement in the absence of deeper financial inclusion and sustained confidence in the domestic currency.

The Monetary Policy Committee also maintained its benchmark interest rate at 35%, opting for caution as global shocks feed into domestic inflation.

Rising oil prices, driven by geopolitical tensions in the Middle East, have pushed up fuel costs, with authorities warning of potential second-round inflationary effects.

Despite these pressures, the RBZ projects that inflation will remain within single digits in 2026, supported by strong foreign currency inflows, which reached US$3.35bn in the first two months of the year, up sharply from US$1.89bn a year earlier.

For the RBZ, the retreat marks a rare public concession in the face of sectoral resistance.