It is often said that Africa is not poor, but is just poorly managed. This goes to the gold trade, hat is resulting in several African countries losing out in taxes since the gold is being smuggled of of the continent. Much of the gold in Africa is being smuggled to the United Arab Emirates, which acts as a gateway to the global market.
An analysis by Reuters uncovered the inconsistencies between the export figures of gold declared by African countries against the import figures declared by the United Arab Emirates. Small-scale mining, also known as artisanal mining has become very lucrative, to the point that much of it is now being run by criminal enterprises.
This is because there is not much regulation in the mining industry, making it easy for these criminal enterprises run by foreigners to pocket lots of money off the labour of poor Africans. Underground gold production and its subsequent smuggling have made many African countries lose so much money in unpaid taxes.
Reuters reported, "Customs data shows that the UAE imported $15.1 billion worth of gold from Africa in 2016, more than any other country and up from $1.3 billion in 2006. The total weight was 446 tonnes, in varying degrees of purity – up from 67 tonnes in 2006." Many African mining industrial firms confirmed to Reuters that they did not send their gold to the UAE. This clearly points to evidence of an illicit trade of gold. Even big industrial companies like AngloGold Ashanti, Sibanye-Stillwater and Gold Fields say they do not send their gold there.
"There is a lot of gold leaving Africa without being captured in our records," Frank Mugyenyi, a senior adviser on industrial development at the African Union, told Reuters. "UAE is cashing in on the unregulated environment in Africa."
Western countries have been reluctant to handle gold from Africa directly because of how its production is associated with gross human rights violations. But this is something which the UAE is not very much concerned with.
Gold refiners actually benefit mostly from the labour of children in unlicensed mines. The illicit production of gold is also causing massive environmental damage. Miners often use mercury to separate the gold from the ore, and mercury is a highly toxic chemical. Mercury exposure leads to disability, kidney failure and speech, sight and cognitive impairment. Researchers and miners in Ghana said that cyanide and nitric acid are also used in the process.
Small-scale mining supports the livelihood of millions of people across the continent. It is a crucial source of employment for millions of people, but this comes at a huge human and environomental cost.
Some miners do it legally, typically selling the gold to middlemen. It then becomes the responsibilty of the middlemen to fly the gold out directly or trade it across Africa’s porous borders.
According to Reuters, "The customs data provided by governments to Comtrade, a United Nations database, shows the UAE has been a prime destination for gold from many African states for some years. In 2015, China – the world’s biggest gold consumer – imported more gold from Africa than the UAE. But during 2016, the latest year for which data is available, the UAE imported almost double the value taken by China. With African gold imports worth $8.5 billion that year, China came a distant second. Switzerland, the world’s gold refining hub, came third with $7.5 billion worth."
No official authority in the UAE responded to questions posed by Reuters.
"Persistent discrepancies in the trade of particular goods and between particular countries ... can identify significant risks of illicit activity," said Matthew Salomon, an American economist.
Some African countries have previously complained about the harms ascoiated with artisanal mining. These include DRC, Uganda, Chad, Niger, Ghana, Tanzania, Zimbabwe, Malawi, Burkina Faso, Mali and Sudan.
African countries are losing out on a very big scale. Besides losing out in unpaid taxes, artisanal mining is also associated with many accidents that lead to the tragic loss of lives. Reuters reports, " In one week this February, three accidents at illegal mining operations in Zimbabwe, Guinea and Liberia claimed the lives of more than 100 people."
It is hoped that with the progression of time, African countries will put regulations in place that make it safe and legal for gold production to take place. It is certain that as of now artisanal mining is not going to disappear. However, action must be taken so that the continent does not continue losing out on its own abundant natural resources.
Header image credit - The Star