This is part 5 of a series
A common factor in Africa’s illicit gold trade is how much of the metal transits through Dubai. Figures from the UN’s Comtrade database show that Africa’s share of Dubai’s gold imports rose to 50% from 16% between 2006 and 2016.
READ MORE Ghana must avoid ‘resource nationalism’ to benefit from gold, says economist
Non-oil trade between Dubai and African states hit $252bn between 2011-2018, making the emirate one of the continent’s most important trading partners. The UAE is among the 10 biggest sources of investment in Africa, much of it in the mining sector. Dubai-based investors are financing a wave of mini-refineries there.
Trading in gold accounts for about 20% of the UAE economy. Although its main trading platform, the Dubai Multi Commodities Centre, says it meets “international benchmarks” for responsible sourcing set out by the OECD and demands comprehensive export documentation, independent studies dispute this.
In April, the US-based Financial Action Task Force put Dubai on its watchlist, complaining about the limited number of prosecutions for money laundering. Kleptocrats and oligarchs find even less scrutiny of their businesses in Dubai than they would in other favoured destinations such as London and Switzerland.
A lengthy report on Dubai’s financial and trading sector by the US-based Carnegie Foundation concluded that the emirate’s ‘highly personalised institutions’ and the ‘lack of domestic and international pressure’ meant that ‘Emirati elites are free to resist reforms that endanger their vested interests or preferred political vision for Dubai and the UAE overall.’
Attempts by Western governments to call out Dubai for aiding illicit financial flows such as gold smuggling can clash with the need to have a dependable ally in the Gulf. Several regional experts told The Africa Report that the UAE’s recognition of Israel, in a deal brokered by US secretary of state Mike Pompeo, would make international pressure on the Emirates over financial flows even less likely.
African states will face some tough choices in managing the pandemic-induced economic slowdown. Many may seek to cut revenue losses from gold smuggling but they will struggle to take on the vested interests that benefit from the region’s booming illicit trade with Dubai.
This article is part of the print edition of The Africa Report magazine: ‘Where is Nigeria (really) heading?’
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