HARARE — A bill outlining the full development of Zimbabwe’s sovereign wealth fund was tabled in parliament on Tuesday.
The fund will now be invested in gold bullion and stockpiles of precious stones.
Mining companies in the country will contribute to the fund through royalties on gold, diamonds, nickel, platinum, coal and coal methane gas.
Analysts said the fund was a workable idea although they raised concern regarding the increased focus on mining to boost government revenue and economic projects.
"Other governments have such funds with variations in scope. The concern for Zimbabwe’s fund could be (about) the higher expectations for mining companies to solely prop up the fund through royalty payments," independent economist Moses Moyo said.
Mining companies have complained that the royalties are too high compared with those in other countries in the region. Experts say high royalties hinder the growth of the industry and mining companies have urged the government to review them.
However, with the government cash-strapped and desperate for additional revenue from mining, and moves to make the sovereign wealth fund a substantive law, miners are worried efforts to have the royalties reviewed could be fruitless.
A copy of the Sovereign Wealth Fund Bill of Zimbabwe, which was tabled in parliament on Tuesday and which has been obtained by Business Day, says the objectives of the fund are "to make secure investments for the benefit and enjoyment of future generations of Zimbabweans"; and "to support fiscal or macroeconomic stabilisation".
However, the bill, which is now expected to be deliberated in parliament in the next few weeks, says proceeds from the fund may not be invested in government debt or government guarantees.
"A portion not exceeding a quarter of the royalties on gold, diamonds, coal, coal-bed methane gas, nickel, chrome and platinum will be paid into the fund," says the bill. It adds that a "portion not exceeding one quarter of the special dividend on the sales of diamonds … and other extractable minerals" will also be contributed towards boosting the fund.
Gold and platinum miners pay 7% and 10%, respectively, in royalties. Platinum mining groups last week scrambled to put together plans to build a refinery in a bid to beat a government deadline and avoid a 15% levy on raw platinum exports.