Maravi

(HERALD) Government orders mining firms to bank locally

Government orders mining firms to bank locally
Sunday, 18 March 2012 11:12
Kuda Bwititi and Itai Mazire

The Government has resolved to compel all mining companies to bank their money with local financial institutions following indications that billions of dollars from the sector are stashed in foreign accounts.

In an interview last Friday, Mines and Mining Development Minister Dr Obert Mpofu said Cabinet took the decision last week in line with concerted efforts to improve liquidity and boost economic performance. He said all mining firms that had deposited money earned from the sale of local minerals in offshore accounts were expected to repatriate the funds to Zimbabwe.

The deadline for the repatriation of the funds and action to be taken against defiant firms will soon be announced.
Earlier this month, the finance ministry reported that it had collected only US$150 million out of the US$2,5 billion generated by mining firms last year.

“Cabinet has taken a decision that all companies operating in the country and exporting minerals should bank their money with local financial institutions,” said Dr Mpofu.

“We have been liberal. It does not make sense that mining companies are operating in the country and keeping money in offshore accounts. An order has been issued and they should all bring the money back into the country because the economy is now dollarised.

“It is only logical. Why would a company mine in this country and bank in an offshore account?”

Dr Mpofu said Government was monitoring the foreign mining companies, adding that they would be forced to comply. He said the country should benefit from revenue generated from mining.

“We are aware that some companies are stashing their money in foreign financial institutions.

“Although we cannot give a figure on how much of the revenue is abroad, it is substantial and our knowledge makes it easier for the money to be repatriated.”

Economist and Reserve Bank of Zimbabwe monetary policy committee member Mr Brains Muchemwa said mining revenue remained low on the local market despite the country exporting minerals worth US$5 billion since 2009.

“Since 2009, we have exported in excess of US$5 billion in minerals alone. However, deposits in the local banking sector are still low,” he said.

“The contribution of the mining sector to the Gross Domestic Product, which is pegged at less than 10 percent, has remained low despite the huge returns that have accrued over the years.

“There is a gross misalignment of the revenue that is coming from the mining sector. The banking of the money in foreign accounts is one of the reasons why we continue to face liquidity challenges. There is need for a policy that will be able to harness revenue from the mining sector.”

Mr Muchemwa said such a policy protected investor needs and those of the country.

“When coming up with such a policy, we should consider that some of the mining companies have offshore accounts because they get lines of credit from abroad.

“Therefore, the policy should be aligned in such a way that it does not stall these lines of investment.”

Labels: BANKING, OBERT MPOFU

posted by MrK @ 10:02 PM