From Kampala to Dubai, Africa’s new gold routes

By Marie Toulemonde

Posted on Friday, 11 February 2022 16:52
Photo montage by JA

Gold is the ultimate safe haven, and its price has soared as a result of the Covid-19 pandemic. After peaking at $66,000 in August 2020, a kilo of the yellow metal was trading at $58,000 on 1 February. This record surge, which has not been witnessed in more than a decade, has led to a global rush.

Africa is at the heart of this movement. In 2017, the continent became the world’s largest gold supplier. But far from being a windfall for the countries whose soil contains the yellow metal, this has mainly benefited those involved in smuggling and organised crime, according to the latest Interpol reports.

Although this African gold rush has paved the way for developing industrial mines, small-scale mining continues to dominate in many regions. However, this practice brings with it a whole host of problems, first and foremost for the gold miners – sometimes children – who risk their lives every time they descend to the bottom of the mine or ruin their health by coming into contact with the mercury or cyanide used to amalgamate the nuggets.

The informal sector’s dominance also creates serious security problems. Many of these artisanal mines are controlled by criminal or armed groups, which use them as a source of funding for the ongoing conflicts in the eastern Democratic Republic of Congo (DRC) and the Sahel.

Dubai, Geneva and London

New routes, at the centre of which is Dubai, have emerged to sell this “dirty” gold. The capital of the United Arab Emirates (UAE), which is trying to compete with Geneva and London in the gold market, is on the way to becoming one of its hubs. To achieve this, the Emiratis are mostly banking on the continent. By 2020, 45% of the $57bn worth of gold imported from Africa worldwide had gone to the UAE.

Before arriving on the shelves of Dubai’s Gold Souk, raw minerals from Central Africa, in particular the DRC, often first pass through either Uganda or Rwanda. Both countries, although considered small producers, have become heavyweights in this field thanks to the re-export of minerals from neighbouring countries.

Officially, Uganda does not import gold from neighbouring DRC and Rwanda does not import gold at all. But it is an open secret that some of the gold resources mined in eastern DRC cross borders to neighbouring countries. In a report published in May 2021, Interpol estimated that “95% to 98% of the gold extracted from artisanal mines is transiting illegally, mainly through Uganda, Rwanda and Burundi”, thus corroborating the conclusions already formulated by the UN Group of Experts in 2018.

False claims

This “conflict gold”, once refined, is then sold – either with false papers or mixed with gold of another origin – before being shipped to Dubai. NGOs such as the Sentry and Global Initiative Against Transnational Organised Crime have documented this trafficking many times.

Refineries are at the heart of this flourishing business. In 2017, President Yoweri Museveni – whose government had just abolished the gold royalty tax – inaugurated the African Gold Refinery (AGR), which is capable of processing 219tn of ore per year in Entebbe, with great fanfare.

This refinery was founded by Alain Goetz, a descendant of a Belgian family of gold traders, who also owns a refinery in Aldango, Rwanda, and a Dubai-based company, PGR Gold Trading. The businessman, who has been repeatedly suspected of being involved in gold trafficking, stepped down as AGR’s director in mid-2021 after being convicted for money laundering in Belgium. He is also facing charges of tax evasion in Rwanda.

To curb smuggling, Kigali signed an agreement with Kinshasa in June 2021 to ensure better traceability of the gold trade. A month later, Kampala announced that it was reintroducing a tax on processed and unprocessed gold.

To better understand the complex circuits that this coveted metal follows and to identify its new routes, we explored the databases of Comtrade, the UN organisation that gathers official statistics on international trade, and the Gold World Council, which brings together the main official players in the gold market.

Who are the main producers? And the main exporters and importers? Who benefits most from Africa’s gold resources? Take a look at the infographics below to learn more.

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