REPORT: Most gold from the DRC is smuggled through Uganda and Rwanda

Uganda Still A Safe Haven for Illicit Gold

NEWS ANALYSIS | URN | Uganda remains one of the hotbeds for smuggled in Africa according to Swiss organization SwissAid. The organization says apart of the gold smuggled from neighboring countries through Uganda, most of the gold produced by artisan miners in the country tends to be under declared or not to be declared.

The report said private jets carrying gold from Africa that land in the UAE often come from African countries known to be transit countries in the gold trade, such as Uganda.

“Most gold from the DRC was smuggled through Uganda and Rwanda and, to a lesser extent, Burundi (some of the gold from South Sudan also transited through Uganda and 60% of the gold from Uganda, 95% of the gold from Rwanda and 99% of the gold from Burundi was imported into the UAE, “ said the report.

Gold from Uganda into UAE was slightly below 50, 000 kilograms in 2022 according to a report by Department of Economic and Social Affairs of the United Nations.

Using data on declared and undeclared gold imports over a ten-year period ending in 2022, Swiss organization SwissAid estimates that the illicit trade amounts to between $23.7-billion and $35-billion annually in Africa.

The dark side of gold: “On the trail of African gold: quantifying production and trade to combat illicit flows’, uncovers the scale of exploitation of artisanal gold miners to fund war, terrorism and organised crime, urging greater transparency in the sector.

It said more than 435 tonnes of gold was smuggled out of Africa in 2022, representing more than a tonne a day.

According to the report, the price of gold on 1 May 2024, this corresponds to a value of USD 30.7 billion.    The majority of the gold was imported into the United Arab Emirates (UAE) before being re-exported to other countries.

Adding together total declared gold production and estimates of undeclared ASM gold production gives total gold production for the African continent of between 991.4 and 1,144.6 tonnes in 2022.

At the price of gold on 1 May 2024 (USD 73,862/kg at 2.15pm43), this represents a commercial value of between USD 73.2 billion and USD 84.5 billion.

By comparison, the consultancy Metal Focus estimated total gold production in Africa at 979 tonnes in 2022.    According to Metal Focus, global production of mined gold was 3,627.7 tonnes in 2022.

Thus, gold production in Africa accounts for between a quarter and a third of global gold production in 2022. A comparison of the data reveals that between 32% and 41% of the total gold produced in Africa was not declared at the production stage in 2022.

Part of the 777 tonnes of gold declared for export in African countries in 2022 was not declared at the production stage or crossed a border illegally before being declared.

Similarly, some gold exports were the result of false declarations or are tainted by under-declaration.   Of the 777 tonnes of gold declared for export in African countries in 2022, around 153 tonnes was exported to another African country, while 624 tonnes was exported directly to a non-African country.

Intra-African trade thus represents only about 20% of the volume of gold declared for export in African countries.

Findings of the report were presented at virtual session on artisanal and small-scale mining (ASM) organized by the Extractive’s Industries Transparency Initiative’s (EITI) international Secretariat.

The session was aimed at strengthening the capacity of multi-stakeholder groups to disclose and use Artisan Miners-related data, and to raise awareness on artisan mining characteristics.

Why Gold?

Mark Robinson, the Executive Director of the EITI in an interview with URN said gold is so important to many countries in Africa including Uganda.

“It is one of your major minerals in Uganda right now. It has considerable and significant revenue potentials. So that is why gold matters so much as compared to other sections of mining” he said.

Illicit gold trade negatively affects Uganda not just in term of revenue foregone, which is actually in trillions of shillings, but also in terms of jobs and wages lost.

Gloria Mugambe, the head of Secretariat at Uganda ETI (UGEITI) recently indicated that gold mined by artisans remained what she described as a grey area.

“We don’t know how much they produce, how many people are employed there. So that is another area we want to study more, ” she said

The gold industry in Uganda is significantly shaped by these artisanal and small-scale mining activities.  Artisanal and small-scale miners (ASMs) dominate the gold industry in Uganda and are distributed across several regions. These regions include: Karamoja Region (Amudat, Abim, Nakapiripirit, Napak, Kaabong, Moroto, Nabilatuk, and Kotido) Eastern Region (Busia, Bugiri, and Namayingo districts).

In the 2020-2021 report, UGEITI said Uganda produced minerals worth 19 billion shillings while the 2021-2022 report said production from the mining was work 202 billion shillings. The 2021-2022 report said Uganda had a 1649 percent increase in gold production.

The UGEITI report was based on the data provided by the Directorate of Geological Surveys and Mines (DGSM). The gold production figure by the Directorate of Geological Surveys and Mines (DGSM) was much less than the export figures reported by Uganda Revenue Authority.

The discrepancies in gold export and production figures reported by the two government entities raised suspicions of either under declaration or a possibility that Uganda has been exporting gold that it does not produce. Others have argued that there should have been data to indicate that some of the gold was imported.

“Do we actually know how much gold we are producing internally specially from the artisan miners? Because we might be reporting what we are exporting as a discrepancy between URA and DGSM and refelecting that as if it is gold coming out of Uganda” notes Dr. Henry Bazira of water Governance Institute.

Bazira said there is need for distinction between what is being produced in Uganda and what is imported and exported.

David Sebagala, Senior Inspector of Mines at the Ministry of Energy said the discrepancies in figures by provided URA and DGSM could be ending with the 2021/2022 reporting period. He said the discrepancies arise from the fact that the law did not provide for standalone gold processing or refining facilities.

“So the biggest source of information on gold exports are the gold refineries. In the period that is being reported, the law did not provide that DGSM regulates standalone refining facilities,” Sebagala revealed.

He explained that when the refineries were established in Uganda, URA chose to license them under the manufacture under bond scheme.

“And they are responsible for most of the export figures. We are working with URA on how we are going to control our gates. Because URA customs are the gate keepers. We are working out modalities on how mineral flows should be controlled. Both incoming and outgoing,”

Parliament enacted the Mining and Minerals Act, 2022 (the “MMA”) which came into force on. 13th October 2022, replacing the Mining Act, 2003.

How much gold is being produced in Uganda?

Sebagala said the volume of gold being produced in Uganda can be determined by how much mercury is being used during the extraction processes. He estimates that on average, Uganda is producing between 2-3 tonnes of gold.

“That is from artisan mining operations. But artisans in their nature they always want to under declare. Even when there is no royalty on gold. They like to under declare production. And that is why government decided to do away with royalty on gold. Thinking that with no royalty, then they will declare what they have produced”

According to Sebagala, the artisan miners tend to sell their gold to the refining facilities eve when the government waived the royalties.  Royalties tend to be much –sought after in the districts with mining and mineral operation because they form part of local revenue.

The EITI Standard requires implementing countries to provide an estimate of informal sector activity. Several countries also disclose information on the legal and regulatory frameworks, licenses, registers, production, exports and revenues linked to the ASM sector.

Smuggling of Gold from Africa

The report found that a vast majority of African gold is shipped to a few countries. Between 2012 and 2022, the UAE, Switzerland and India were the top three countries importing gold from Africa. In 2022, these countries were responsible for 80% of African gold imports abroad.

In 2022, according to official figures, almost half of this gold was imported into the UAE. China and the “other countries” category also appear to be major importers at first glance.

However, the report says a detailed analysis of non-African countries’ import statistics shows that this is misleading.

It said the proportion of African gold going to the UAE is likely to be even higher in reality than the official figures indicate. Uganda is one of the 23 countries from Africa whose gold exports have been registered in the UAE.

Gold imports from Africa to the UAE more than doubled between 2012 and 2022, from 243 tonnes to 609 tonnes. The 2022 figure, which corresponds to a trade value of USD 34.5 billion, represents 58% of the total gold imported into the UAE.

Some 78% of the gold from Libya and 70% of the gold from the CAR was declared for import into the UAE. Some of the gold from the CAR also transited through Cameroon111 and Rwanda112 before being imported into the UAE.

The gaps between gold exports from African countries to the UAE and imports of African gold into the UAE have been considerable throughout the 2012–2022 period. Over these eleven years, they reach 2,569 tonnes in total, which corresponds to a trade value of around USD 115.3 billion.