Zimbabwe risks losing huge volumes of gold to neighbouring countries if government pushes ahead with its plan to double gold royalties to 10%, the highest rate in Africa, Chamber of Mines CEO Isaac Kwesu has warned. Speaking during a post-budget discussion, Kwesu said the proposed hike would make Zimbabwe one of the most expensive jurisdictions in the world for gold mining, creating the perfect conditions for smuggling, mine closures and declining deliveries to Fidelity Gold Refinery.
Kwesu noted that global royalty rates typically range between 4% and 5% and raising Zimbabwe’s rate from 5% to 10% would push the country far above regional peers. He highlighted that South Africa and Ghana charge 5%, Tanzania 6%, Uganda 5%, the DRC 3.5%, Namibia 3% and Zambia 6%. Any royalty level even 1% above the global median, he argued, results in an immediate loss of gold to cheaper destinations.
He described the effect as “osmosis of gold,” explaining that gold naturally moves from high-royalty to low-royalty environments, driven by the mineral’s high financial mobility. Even with police and army deployment, he said, authorities cannot stop gold from leaking into neighbouring countries where miners receive higher returns.
Kwesu said the highest royalty bracket globally averages just 6%, far below the 10% proposed by Finance Minister Mthuli Ncube. He warned that the hike risks reversing production, undermining viability, and fuelling side-marketing as miners avoid formal channels. If government insists on the increase, he said, it must ensure it does not discourage deliveries or force producers out of business.
He urged the minister to review the royalty proposal, cautioning that without competitiveness, Zimbabwe could face shrinking output and reduced economic benefits from its most valuable mineral.
