The slow pace in establishing a mineral certification system for the Great Lakes Region is putting countries at risk of losing investors in the sector.

Reports indicate that some dealers from Burundi and Uganda are stuck with their merchandise abroad, after processors began rejecting minerals from countries that do not have acceptable standards. Others have opted for lesser returns, as they trade through third parties.

“The practice has been that you mine in Uganda and sell it to a buyer in Kenya or Tanzania, who exports it overseas. Why should we sell our gold through Tanzania and not directly on the international market?” asked Prince Opoku, operations director at Blaze Metals Resources Ashanti Ltd.

“We have gold which was exported officially from Uganda but has not been sold in Dubai. All refineries are rejecting the source of origin.”

Transit routes

In 2007, the UN Security Council put an embargo on gold, tantalite, wolframite and casterite originating from Burundi, Rwanda and Uganda because of reports that these countries were transit routes for smuggled minerals from the Democratic Republic of Congo.

A new report by the UN Group of Experts which assessed gold smuggling, shows that $400 million from the illegal trade was used to finance the rebellion in eastern DRC in 2013.

READ: Smuggled $400m Congo gold fuels war

But Uganda argues that the embargo is not the sole solution to DRC’s conflict minerals because the problem lies elsewhere. Compared with other counties in the region, DRC’s taxes on minerals are the highest. For example, a mineral dealer’s licence that goes for $500 in Uganda could go for $20,000 in the DRC.

Corruption and bureaucratic processes make it even more complex.

“Even the person who wants to do straight business will not do it because they have made it too expensive, so they would rather smuggle the minerals,” said David Sebagala, the inspector of mines at the department of Geological Survey and Mines.

Uganda says its mining sector is being suffocated by the embargo, yet it has vast mineral deposits that are also being smuggled out of the country by dealers who buy from artisanal miners, through neighbouring districts.

This development undermines the efforts that countries are making in attracting investments into the mineral sector.  In May, East Africa will be hosting a mineral conference in Uganda to showcase the region’s potential and attract investments.

Although there is an existing Protocol on Illegal Exploitation of Natural Resources, one of the pacts signed under the International Conference on the Great Lakes Region specifically to address this limitation, countries are yet to domestic it.

The EastAfrican has learnt that a committee comprising of members from the state parties has now been established to fast track the protocol.