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Former deputy prime minister Arthur Mutambara has described the Reserve Bank of Zimbabwe’s gold coins as a “self-enrichment scheme” for the Zanu PF elites.
The central bank issued 2000 22-carat gold coins worth US$1,824 each on Monday, which central bank governor John Mangudya said would help tackle chronic hyperinflation.
The gold coins – called Mosi-oa-Tunya – will have “liquid asset status”, meaning they can be converted to cash, traded locally and internationally, and used for transactions. People can only trade the coins for cash after holding them for at least 180 days.
Mutambara said the scheme reeked of corruption.
“What is going on, keeping and creating these arbitrage opportunities USD/RTGS and now gold coins is part of a deliberate looting strategy by the elites running our country,” the robotics professor said on Wednesday.
“An economy without arbitrage opportunities does not benefit uncreative, primitive accumulation-driven elites.”
Securities firm Morgan & Co said in a market intelligence report: “Gold deliveries in Zimbabwe have significantly recovered because of the appetising US dollar payments offered to artisanal miners.
“However, should there be a disparity between the amount of US dollars used to purchase the gold from miners and the US dollars used to pay for the coins, this could squeeze the central bank and its intermediaries’ foreign currency reserves.
“If this ripples to artisanal gold miners, this could result in low deliveries to Fidelity Printers and increase gold smuggling activities.”
Fidelity Printers, a subsidiary of the central bank, is the country’s only authorised gold buyer.
Zimbabwe’s inflation was 191 percent in June, which has sent prices galloping while eroding salaries.
Economist Prosper Chitambara said Zimbabwe’s government is trying to moderate the very high demand for the US dollar “because this high demand is not being matched by supply.”
Chitambara added: “For Zimbabwe we are in chronic hyperinflation so the expectation is that there will be a huge uptake of these gold coins.
“For the common man, there is not really much to benefit directly from this, especially if you don’t have any excess cash.
“Many people have no money for bread, let alone for savings. The expectation is that indirectly it will benefit the ordinary person through moderating the prices.”
Mutambara says the decision to sell the gold coins in Zimbabwe dollars using a discredited exchange rate opens the facility to abuse.
He explained: “Here is how it works. To get started, the elite person takes their RTGS to the RBZ and buys the USD at the auction rate, say 320.
“This ill-gotten USD is taken to the parallel market and buys RTGS at 950. That’s a profit of 200 percent. Then you go and buy your gold coins at 100 percent profit.
“So, the potential benefit to the elites, the connected, is as follows: You start with US$10,000 it becomes US$30,0000 then it becomes US$60,000. From US$10k to US$60k with no production to accumulate 500 percent profit.”
The opening price for the gold coins in Zimbabwe dollars was $805,745.35 for each coin at a rate of 441.7463 to the United States dollar. The exchange rate is double that on the parallel market at around 900. ZimLive
