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Small Scale Miners Financial Exclusion Weighs Down Forex Scheme

While miners representatives, the Zimbabwe Miners Federation (ZMF) continue engaging Government on the foreign currency retention scheme threshold with the understanding that it will addresses operational challenges for small scale miners, the artisanal miners’ exclusion from financial products has gravely undermined the scheme.

The latest Monetary Policy Statement outlined by the Central Bank Governor, Dr John Mangudya further slashed the foreign currency retention threshold for small scale miners from 70 to 55 percent, meaning miners will be paid 55 percent of their earnings in US Dollars with the remaining 45 percent deposited in bank accounts in RTGS Dollars.

Since the announcement, gold deliveries to Fidelity have taken a nosedive from monthly production average of 2.5 tonnes to just 20 kg in  the month of February as most miners have resorted to selling their produce on the black market where they are rewarded their entire earnings in hard currency.

But for miners, its being financially excluded which has compounded an already dire situation.

Most small scale miners are not financially literate hence their awareness to financial products is very limited.

Late last year RBZ introduced separate accounts for local RTGS and Nostro Foreign Currency Accounts with the intent to separate local RTGS dollars from US Dollars.

Christopher Chiwalo, a small scale miner in Glen Forest area told 263Chat Business that it remains a far-fetched reality to assume miners will deposit their US Dollars in the Nostro FCA when the majority of them are not financially included.

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And for this reason, Chiwalo argues, the foreign  currency retention scheme will still be weighed down as the remaining 45 percent in RTGS dollars can not be deposited to some one without a bank account.

“Government should be in a position to intervene, discussing with bankers to organize all small scale miners so that it gives platform that will help small scale miners understand what exactly the banking system is all about. Most of the miners don’t have bank accounts because some don’t even have national identity cards, some don’t have permanent residency, they maybe mining here today and tomorrow they leave for another area where a gold rush will have been identified,” said miner Christopher Chiwalo.

Chilawo says most small scale miners are not even aware of the separation of RTGS dollars accounts from Nostro Foreign Currency Accounts, a telling experience that miners are ignorant of financial products.

Statistics sadly support Chiwalo’s assertion.

In a country with around 14 million citizens, there are only 3 million bank accounts as indicated recently by the RBZ governor and only 10 percent of those have a $ 1000 plus showing the bank deposit culture in the economy owing to a combination of low confidence and financial exclusion in the banking sector.

Small miners are not an exception and analysts have called on Government through the Central Bank to loosen bank account opening requirements and engage miners head-on.

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They say Government has to do away with controls on foreign currency payments for productive sectors like mining on one hand, while on the other hand it intensifies financial inclusion of players in these sectors now that the Nostro FCA platform can guarantee their foreign currency is safely kept and circulates formally within the banking system.

“Government should let producers get their foreign currency in full and probably work on how best can it cajole miners to return their foreign currency back into the banking system. Controls will always meet resistance and it brings us to were we are now as you can see deliveries are no longer coming through to Fidelity,” said economic analyst Pepukai Chivore.

Miners say the imposed foreign currency retention threshold is negatively affecting operations as they have to acquire consumables and other work-related equipment in US Dollar currency hence the move to shun deliveries to Fidelity Printers.

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