Every year, billions of dollars’ worth of gold is smuggled out of Africa through Kenya into the United Arab Emirates (UAE) in the Middle East. According to an analysis by Reuters, the Middle East is a gateway to markets in Europe, the United States, and beyond.
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.
Just recently, the special forces of Uganda have seized, an important cargo ship of two tons of gold belonging to a rebel group led by a certain Mulum Jean. The cargo was reportedly meant to have passed through Kenya for onward transmission to a group of European businessmen known as Olivier and Sasha.
Investigations are underway and the authorities of the countries of the Great Lakes are holding a Zambian declarer coming from the border of Kenya whose identity is yet to be revealed.
Much of the gold was not recorded in the exports of African states. Five trade economists interviewed said this indicates large amounts of gold are leaving Africa with no taxes being paid to the states that produce them.
Previous reports and studies have highlighted the black-market trade in gold mined by people, including children, who have no ties to big business, and dig or pan for it with little official oversight. No one can put an exact figure on the total value of gold that leaves Africa each year.
Not everyone in the chain is breaking the law. Miners, some of them working legally, typically sell the gold to middlemen. The middlemen either fly the gold out directly or trade it across Africa’s porous borders, obscuring its origins before couriers carry it out of the continent, often in hand luggage.
For instance, the Democratic Republic of Congo (DRC) is a major gold producer but one whose official exports amount to a fraction of its estimated production – most of it is smuggled into Uganda, Burundi, and Rwanda.
“It is of course worrisome for us but we have very little leverage to stop it,” said Thierry Boliki, director of the CEEC, the Congolese government body that is meant to register, value and tax high-value minerals like gold.
Most of the gold is traded in Dubai, home to the UAE's gold industry. In 2016, the UAE reported gold imports from 46 African countries. Of those countries, 25 did not provide Comtrade with data on their gold exports to the UAE. But the UAE said it had imported a total of $7.4 billion worth of gold from them.
Read more: Nairobi: Hub for gold scammers in 2021
Gold from Africa
The United Arab Emirates has imported unrefined gold worth billions of dollars from African states since 2006, as rising gold prices after the 2008 financial crisis encouraged informal mining.
“There is a lot of gold leaving Africa without being captured in our records. UAE is cashing in on the unregulated environment in Africa,” said Frank Mugyenyi, a senior adviser on industrial development at the African Union who set up the organisation’s minerals unit.
In other states, including the UAE, these concerns have been less of a problem. Over the last decade, gold from Africa has become increasingly important for Dubai. From 2006 to 2016, the share of African gold in UAE’s reported gold imports increased from 18 percent to nearly 50 per cent, Comtrade data showed.
Gold can be imported to Dubai with little documentation. Governments across Africa are trying to work out how to manage a sector that, whatever its risks, provides a livelihood for many of their citizens, and which could be harnessed as a source of revenues.
A Tanzanian parliamentary report estimated that 90 per cent of annual production of informally mined gold is smuggled out of the country: The government wants the central bank to buy this up. In March 2020, then President John Magufuli – who is now deceased – launched a plan to establish hubs where the trade would be formalised by offering access to financing and regulated markets.
Burundi Minister of Hydraulics, Energy and Mines, Ibrahim Uwizeye believes his country is leaking gold to the UAE on a massive scale. Of the 9.5 tonnes of gold the government estimates informal miners dig up each year, just 200 to 400 kg are declared to the authorities, he said.
Most of the smuggled gold originate from Uganda, Burundi, Rwanda and Kenya, according to the minister.
“I understand that Dubai is the destination for this gold. But since (the trade) is fraudulent, I have no details,” Mr Uwizeye told a news agency in an interview last year.