HARARE – The Reserve Bank of Zimbabwe has reduced the foreign currency retained by small scale miners from gold deliveries – and miners have reacted by not selling to the government-run Fidelity Printers and Refiners, the sole gold buyer.

Speaking at a post 2019 Monetary Policy Statement review meeting with small-scale miners Tuesday, Reserve Bank of Zimbabwe deputy director for Financial Markets William Manhimanzi said the central bank was struggling to pay miners in hard cash as it was failing to import notes via South Africa.

The retention thresholds for small-scale gold miners were reduced to 55 percent from 70 percent, a development which seems to have irked small-scale gold producers.

Last year, small-scale miners delivered 22 tonnes or 66 percent of the 33,3 tonnes that were delivered to Fidelity. But five days after the 2019 Monetary Policy Statement on February 20, only 20kg of gold had been delivered, against 60kg-per-day on average.

South African banks are de-risking from supplying Zimbabwe with U.S. dollar notes, Manhimanzi said.

Zimbabwe pays its gold miners in cash, but has been failing to do so of late as the usual suppliers, South African banks, have been cutting ties amid fears of being fined by the United States’ Office of Foreign Assets Control (OFAC).

Zimbabwe is under United States sanctions and unless otherwise authorised or exempt, transactions involving the greenback are penalised if they involve an entity or individual listed on the Specially Designated Nationals List (a list of individuals and entities under US sanctions). 

The nature of the regulations, however, makes it difficult for foreign banks to know whether they are dealing with Specially Designated Nationals or not, hence the decision by most South African banks to de-risk from dealing with Zimbabwean institutions. 

“Ordinarily, we import the cash from South Africa, and most of the banks, due to what we call de-risking issues, have now given us notice that they can no longer provide our own local banks with cash (US dollars), so we are in a Catch-22 situation,” said Manhimanzi.

He said the only South African bank that was still facilitating cash imports into Zimbabwe was First National Bank (FNB).

“The only bank that remained was FNB, and they gave notice in December 2018 that they would no longer be supplying our own local banks with cash.”

The move has not only affected banks, as money transfer agencies such as Western Union are failing to pay out remittances to beneficiaries due to their inability to bring in cash through their local banks.