Zimbabwe stands at a familiar but consequential crossroads. Buoyed by elevated global gold prices, the country is enjoying a surge in foreign currency earnings and renewed optimism about its mineral wealth. Yet beneath the surface lies a structural risk that has confronted many resource-rich economies before: the temptation to anchor national development strategy on commodity windfalls rather than on the slower, more complex work of building a diversified, productive economy.
By Brighton Musonza
Gold exports can undoubtedly provide short-term fiscal breathing space and help stabilise external accounts. However, an economy overly reliant on mineral extraction is inherently exposed to global price swings, external demand shocks and financial market volatility. History shows that such dependence often leads to the so-called “resource curse,” where commodity booms coexist with weak industrialisation, limited job creation and persistent macroeconomic instability.
A gold-led growth model can distort incentives across the economy. Easy foreign exchange inflows may encourage speculative activity and rent-seeking rather than long-term productive investment. During boom periods, rising export receipts can put upward pressure on the real exchange rate, eroding the competitiveness of manufacturing and agricultural exports — a classic manifestation of Dutch disease. Over time, this dynamic weakens the domestic industry, increases import dependence and leaves the economic structure shallow and vulnerable.
Recent global market movements underscore both the opportunity and the fragility of a mineral-driven strategy. Reserve Bank of Zimbabwe (RBZ) governor John Mushayavanhu has noted that while record-high gold prices are strengthening foreign currency inflows, broader global volatility, including a weakening US dollar, could generate mixed outcomes for the domestic economy. A softer dollar often coincides with higher global commodity prices, but it can also translate into more expensive imports of goods and raw materials. For a country heavily reliant on imported inputs, higher import costs feed directly into domestic production costs, placing upward pressure on inflation and squeezing local competitiveness.
Although gold prices have recently retreated from their peaks — falling from around US$5,500 per ounce to roughly US$4,677 — they remain significantly higher than a year ago. Major international banks such as JP Morgan still expect strong central bank and investor demand to keep prices elevated. Yet such projections also highlight the inherent volatility of commodity markets. Zimbabwe’s revenue outlook, as local brokerage IH Securities has cautioned, remains vulnerable to adverse price shocks given the economy’s heavy exposure to mining and agriculture.
In this context, the role of government policy becomes decisive. Fiscal authorities must resist treating mineral revenues as a substitute for a broad, resilient tax base. Instead, windfall earnings should be channelled into productivity-enhancing investments: reliable power generation, efficient transport and logistics networks, digital infrastructure and human capital development. These foundations lower the cost of doing business and enable the private sector to expand in manufacturing, agro-processing and high-value services.
A coherent industrial policy is equally critical. Supporting value addition in mining and agriculture, strengthening technical and vocational training, and improving access to finance for small and medium-sized enterprises can help deepen domestic supply chains and create employment beyond the extractive sector. Without deliberate efforts to build these linkages, mineral wealth risks remaining an enclave activity with limited spillover benefits.
Monetary policy must also play a stabilising role. The central bank faces the delicate task of managing foreign exchange inflows from gold exports without allowing excess liquidity to fuel inflation or exchange rate instability. Prudent reserve management, careful sterilisation of surplus liquidity and policies that steer credit toward productive sectors rather than speculative activities are essential. Financial-sector supervision should ensure that banks do not become overly exposed to mining at the expense of broader economic lending.
Close coordination between fiscal and monetary authorities is therefore indispensable. Establishing mechanisms to smooth resource revenues over time — such as a stabilisation fund or sovereign wealth fund — would help cushion the economy against commodity price cycles and prevent pro-cyclical spending during booms. Strong governance, transparency and institutional accountability are equally important to ensure that mineral wealth is converted into long-term productive assets rather than short-lived consumption or patronage.
Governor Mushayavanhu has argued that the net effect of a weaker US dollar could be positive for Zimbabwe if the country succeeds in raising gold production while managing rising import costs. That caveat is crucial. Expanding output in mining can enhance export earnings, but without parallel growth in industry and services, the broader economy remains exposed to external shocks and limited in its capacity to generate widespread employment.
Ultimately, minerals such as gold should be viewed as a catalyst rather than the foundation of development. Zimbabwe’s long-term prosperity depends on building a diversified, resilient economy capable of generating jobs at scale and raising living standards sustainably. That requires disciplined macroeconomic management, forward-looking industrial policy and a central bank focused on stability and productive credit allocation. The real challenge is not whether Zimbabwe can benefit from high gold prices, but whether it can convert today’s windfall into the structural transformation needed for tomorrow’s growth.
