An Investigation into the Effects of Debt Financing Schemes on the Operations of Small Scale Mines in Zimbabwe during the Epriod 2009 to 2013: A Case Study Of Small Scale Mines in The Bubi District: A Case Study of Small Scale Mine Sin the Bubi District, Matebeleland North

Author: Ncube, Mbongeni

This study had three objectives the first being to establish the effects of the design of debt financing schemes on the operations of small scale mines. The second objective was to establish the extent to which the management of risk factors can influence the performance of debt financing in small scale mining operations. The third objective was to determine the contribution of the debt financing schemes towards capacity building within the small scale mining sector. The study population in this research included six banks in Bulawayo and 11 small scale mines from the Bubi district. Problems were encountered in obtaining registers of small scale miners from the miners’ association. The later mentioned issue posed problems in coming up with small scale miner study population but was solved by identifying active gold mining areas in the Bubi district which led to the location of three clusters with abundant small scale gold mining activity from which simple random sampling was used to locate mines using grid numbers from a surveyor general map of the Bubi district. A case study design was adopted that allowed use of concurrent researcher administered questionnaires and semi structured interviews with individual bankers and small scale miners that lasted one hour 15minutes. Data analysis used excel and content analysis and established that only 18% of miners had tertiary education and 64% of miners never received any mining related training. Further analysis data revealed that 73% of small scale mines were not merchandised and that 53% of small scale miners did not have any bank accounts. These observed trends posed challenges for small scale miners seeking loans from banks as they pose a risk in lending. Based on findings from this study the loan schemes did not have any impact on small scale mining operations as only one miner who is very senior member of the of the miners’ association obtained a loan during the period of 2009to 2013. Failure of the schemes was demonstrated in the research to be linked to various factors that include classification of small scale mines under Small to Medium Scale Enterprises (SMEs) which resulted in inappropriate design of lending to the SSM sector, lack of grass roots participation, the informality of small scale mining, corruption, lack of accountability and transparency and benefits capture by elites where the other factors that precipitated failure of loan schemes