Zimbabwe’s minerals sector is vulnerable to smuggling and illicit flows out of the country due to misinvoicing, according to a new report.

‘Capital Flight and Trade Misinvoicing in Zimbabwe’, a report prepared by the Zimbabwe Economic Policy Analysis Research Unit calls for tougher monitoring of both local and foreign-owned mining companies to curb capital flight.

Misinvoicing

This paper estimates trade misinvoicing in Zimbabwe from major trading partners using trade data from 1980 to 2014 from the United Nations Commodity Trade Statistics Database.

The report found that Canada, China, Germany, Greece, Italy and the US were used as gateways for capital flight out of Zimbabwe. The study concluded that unrecorded capital inflows into Zimbabwe are mainly from South Africa, Belgium, and Australia.

Mining focus

The report says trade misinvoicing is most prevalent in exports of diamonds, gold, and nickel.

Misinvoicing through imports is not rampant according to the report.

Political stability

The results show that capital flight increased during periods of macroeconomic and political instability.

This according to the report indicates the need to ensure political and macroeconomic stability to reduce capital flight.

‘Capital Flight and Trade Misinvoicing in Zimbabwe’ can be found here.