Staff Writer 
ZIMBABWE’s new gold production record of 36,48 tonnes in 2024, up 21 percent from 30,1 tonnes the prior year, should give a major boost to the country’s local currency — the ZiG — which is backed by a basket of minerals, mainly gold, analysts say.
Gold producers broke the national target of 35 tonnes that had been set for last year, with the positive performance largely attributed to favourable prices, ongoing expansion projects by mining firms and strong performance from the small artisanal miners.
This comes as the Reserve Bank of Zimbabwe (RBZ) continues to grow its foreign currency and mineral reserves to back its new local currency.
The apex bank has been collecting half of royalties from miners in the form of refined minerals as part of ongoing efforts to build reserves.
Since its introduction in April of 2024, the ZiG has largely been stable, albeit showing signs of fragility after it was devalued by almost 43 percent in September last year.
“Improved gold production is a positive development for Zimbabwe in terms of foreign currency generation. It’s the lowest hanging fruit that could change the economic fortunes and stabilise its currency,” economic analyst Victor Bhoroma said.
“Authorities have been attempting to incentivise the formalisation of gold production but a lot still needs to be done as a massive volume of gold continues to leak unaccounted for.”
Bhoroma however stressed that other factors such as fiscal discipline, export growth and diversification and strengthening of other industries could enhance foreign currency generation and stabilise the local currency.
According to the Reserve Bank of Zimbabwe (RBZ), the country’s external sector remained resilient in 2023, with total foreign currency receipts amounting to US$11 billion and the balance of payments in surplus of US$133,9 million.
“The prices have been good and it encouraged small scale miners to be selling their gold to the conventional buyer, Fidelity Gold Refineries,” Young Miners Foundation chief executive Payne Kupfuwa said.
“The 100 percent US-dollar payment was also an added advantage because previously part of the payment was done in Zimbabwean dollars and the remainder in United States dollars. So, the changes attracted so many small-scale miners selling their gold to Fidelity Gold Refineries.”
It was a glittering year for gold producers in 2024 as prices closed the year within the US$2 600-US$2 620 range per ounce (oz) from around US$1 900/oz in September 2023.
Now Zimbabwe has set the gold production target for 2025 at 40 tonnes which, according to Kupfuwa, is achievable.
“We look forward to the growth and to meeting the 40 tonnes target. We can even reach 50 tonnes,” he said.
Zimbabwe needs to quickly ramp up gold production and capitalise on current favourable prices if it is to shore up its foreign currency reserves which, as of November 2024, stood at US$509 million.
At the time, total reserve money in local currency stood at ZiG3,4 billion, which translated to US$129 million, implying that the US$509 million foreign reserves were more than three times the cover of local currency reserve money.
Nonetheless, Zimbabwe still needs to grow its foreign reserves to stabilise its local currency and relieve pressure on foreign currency demand.
To give perspective, Kenya’s foreign exchange reserves reached a three-year high of US$9,32 billion in November last year, enough for close to five months import cover.
Almost at the same time, Zambia which is a smaller economy had foreign exchange reserves amounting to US$3,9 billion.
This comes as most central banks in Africa are turning to gold to protect themselves from economic and geopolitical instability as well as diversifying their financial portfolios.
Ghana, which is Africa’s largest gold producer and Uganda, have been buying gold from artisanal miners to bolster their shrinking foreign currency reserves. newsdesk@fingaz.co.zw
