The Significance of Price in Determination of Zimbabwean Gold Production

Abstract

Zimbabwe's gold production trend over the period 1982-2015 exhibits an initial increasing trend up to 1999, followed by a generally decreasing trend. Direct observation of the price trend over the same period is not supportive of the postulated positive relationship between gold output and price. This study uses the econometric approach to test for the significance of the price variable in explaining gold production movements over the period. The study concludes that the effect of several and inconsistent policy changes over the period (both political and economic) had a preponderant effect on gold production that overshadowed the price incentive (or disincentive). There is need for a political convergence that is capable of fostering a conducive political environment in which political risks and uncertainties are significantly diluted. Government needs to revert to its past assistance and support programmes of the 1982-1999 period, examples of which include advisory support to small-scale miners, loan schemes, mobile drilling facilities, plant hire schemes, tax incentives for export market development (an export promotion scheme). The Ministry of Mines and Mining Development and related institutes, need to be better funded in order to ‘feed the goose that lays the golden egg'.