Govt Puts Mines Minister on Notice Over ZiG Currency Backing

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SOUTH AFRICA – Zimbabwe’s Deputy Mines and Mining Development Minister, Polite Kambamura has sensationally claimed that together with the minister, Winston Chitando, they face the possibility of being sacked if they fail to provide minerals to back the Zimbabwe Gold (ZiG) currency. 

Speaking at the Zimbabwe Investment Summit 2024 in South Africa, Kambamura emphasized the importance of backing the ZiG with minerals, stating that he and his minister would be held accountable if they fail to do so. 

“If we fail to put the required reserves in the RBZ (Reserve Bank of Zimbabwe) vault, then myself and my minister are gone,” he said 

Last year, miners were mandated to pay half of their royalties in the mineral they mine to shore up the central bank’s reserves. The ZiG currency, introduced due to the massive depreciation of the Zimdollar, is currently struggling against high inflation and eroding public and private incomes.

He highlighted Zimbabwe’s rich mineral resources, including platinum and lithium, but noted that capital is needed to upscale mining production.

“Zimbabwe hosts one of the biggest platinum deposits after South Africa in the world. We are one of the top five lithium producers in the world and the largest lithium producer in Africa,” he said

The government has recently arrested several illegal forex dealers to push the uptake of ZiG, but economists warn that without proper backing, parallel forex dealers will always find ways to operate. The inability to access foreign currency from formal financial institutions will continue to create demand for the parallel market.

While ZiG can be used for some transactions, its use is limited, and the official forex rate differs from the rates used by businesses and parallel forex dealers. 

The government is taking action against those dealing in the parallel market, enforcing the law and imposing fines and jail terms for money laundering.

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