As a way to mobilise more funds for the auction system, the Reserve Bank of Zimbabwe (RBZ) revised the forex retention threshold in January 2021 resulting in exporters surrendering 40% of their earnings to the Central Bank.
Even though the RBZ monetary policy regarded the move as a step in the right direction “to refine and enhance the sustainability of the Foreign exchange Auction System” the far-reaching change has not been welcomed by mining companies.
It is the reimbursement of the surrendered money in local currency at the official auction rate 6 that has been viewed as the elephant in the room by exporters due to its deleterious effect on their companies’ operations.
Many mining companies contend that they are suffering from burgeoning foreign currency-denominated expenditures which leave them with inadequate resources to manoeuvre.
The mismatch between the forex retained and the mining companies’ operative costs compounded by the harsh effects of the Covid-19 -induced lockdown will significantly impact the mining landscape.
The situation is exacerbated by unpredictable adjustments to investment laws which can detract investment drive in the country and runs contrary to the call for a US$12 billion mining industry by 2023.
In light of the aforementioned, regulatory decisions and laws by the government should be predictable and viable to lure potential investors and boost the mining sector’s contribution to national development.
There is a need for the government to balance between the need to raise revenue and support for the mining sector as this will pay dividends to the country and citizens at large.
The Minerals Act states that all mineral resources in the country belong to citizens and should therefore benefit everyone, as such there is credence in the idea to leave minerals in the ground rather than risk the triple challenges of illicit financial flows, climate impacts and local conflicts associated with extractive processes in corruption prone jurisdictions.