By Shannise Dzobo
Zimbabwe is losing billions of dollars due to illicit financial flows (IFFs) in the mining sector, as companies evade taxes and exploit legal loopholes to avoid paying royalties.
Experts warn that weak regulations and corruption have transformed the industry into a “theatre of organised crime,” costing the country over $32 billion between 2000 and 2020.
According to Tashinga Zamba, Zimbabwe Coalition on Debt and Development (ZIMCODD) Programs Manager for Fiscal Justice, trade mispricing alone accounted for an estimated $11.2 billion in losses between 2009 and 2018. In 2019, Zimbabwe lost approximately $3 billion to IFFs, further straining an already fragile economy.
Illicit financial flows in Zimbabwe’s mining sector take various forms, including tax evasion, trade mispricing, smuggling, and corruption. Mining companies manipulate financial records to understate profits, while others engage in cross-border smuggling of gold and precious minerals, according to a Tax Justice Network Africa 2020 article.
Zamba highlights that a lack of transparency and accountability in the sector, coupled with poor governance, allows these financial leakages to persist. “The opacity of Zimbabwe’s mining industry makes it easy for companies to misprice minerals, evade taxes, and siphon money out of the country without detection,” he said.
Farai Maguwu, director of the Centre for Natural Resource Governance (CNRG), warns that Zimbabweans should recognise that these private mining companies do not operate in isolation. “The mining sector has become a well-organized system of plunder. The line between state officials and private mining companies is increasingly blurred, making it harder to hold anyone accountable,” Maguwu said.
Despite the staggering losses, Zimbabwe’s regulatory framework remains weak, allowing mining companies to exploit loopholes. Experts argue that outdated laws, such as the Mines and Minerals Act, fail to address modern financial manipulation tactics.
Zamba stresses that the government needs to strengthen oversight and adopt international standards such as the Extractive Industries Transparency Initiative (EITI) to curb illicit financial flows. “Publishing mining contracts, disclosing payments made to government agencies, and creating a public register of mining company ownership would be crucial steps toward greater accountability,” he said.
Additionally, regulatory institutions such as the Zimbabwe Revenue Authority (ZIMRA) and the Ministry of Mines and Mining Development lack the resources to effectively monitor and audit mining activities.
A high-profile example of tax evasion in the mining industry involves Afrochine (Private) Limited, a Chinese-owned smelting company operating in Chegutu. In early 2024, a High Court ruling revealed that Afrochine had under-declared royalties by nearly US$3 million on the sale of ferrochrome alloy.
Since 2019, the company has excluded ocean freight costs from its calculations, violating the Finance Act [Chapter 23:04] and accumulating a debt of US$2,872,897.89 in unpaid royalties. Sections 244 and 245 of the Mines and Minerals Act clearly outline how royalties should be calculated, yet Afrochine bypassed these provisions for years.
This case underscores the broader issue of non-compliance among mining firms, many of which avoid paying their fair share through legal technicalities.
The Midweek Watch tried to get a comment from Afrochine Pvt Ltd Dinson Holdings Group Business Operations Executive Edwell Maposa the mining company, but it was futile.
We called Maposa on his mobile cellphone, and he requested that the questions be sent through his email. After that, he went on to request that the questions be sent using the company email but failed despite fulfilling the requirements, and he has not done so for two weeks now.
ZIMRA acknowledges that mining companies are involved in smuggling, illegal gold dealings, and tax evasion. However, Corporate Affairs Executive Gladman Njanji admits that quantifying the exact financial loss remains challenging.
“There is information that some miners engage in fraudulent activities, but specific details are often lacking. Many factors come into play when detecting such anomalies, making it difficult to determine the total revenue lost,” Njanji said.
ZIMRA has implemented various penalties to address tax evasion, including financial fines, legal prosecution, and public disclosure of defaulters. Companies that wilfully evade taxes or submit false statements may face legal action, while those that default on payments risk having their names publicly exposed.
Yet, experts argue these measures remain largely ineffective due to weak enforcement mechanisms. “Naming and shaming mining companies is not enough when powerful players within government structures are complicit,” Maguwu said.
The continuous loss of mining revenue has dire consequences for Zimbabwe’s economy. Public services such as healthcare, education, and infrastructure development suffer from chronic underfunding, while ordinary citizens bear the brunt of a failing system.
Zamba warns that the failure to tackle IFFs will only deepen inequality. “When billions of dollars are siphoned out of the country, it means fewer resources for essential services. The ordinary Zimbabweans pay the price while mining companies and corrupt officials profit,” he said.
Moreover, the lack of proper oversight fosters a culture of impunity, allowing powerful elites to continue benefiting at the expense of national development.
Experts agree that Zimbabwe must urgently reform its regulatory frameworks to curb illicit financial flows. Strengthening tax laws, enforcing transparency measures, and equipping regulatory agencies with more resources are critical steps.
“The government should establish a publicly accessible register of mining companies and their beneficial owners, enforce stricter audits, and ensure that mining contracts are transparent,” Zamba suggested.
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