Gold trade in East Africa: A den of Robbers?

 Gold trade in East Africa is interesting: Countries that produce gold in thousands of Kilograms export tons of gold. Countries that do not feature among the top gold producers in Africa, produce more gold than countries listed as top gold producers.

 Three years ago, this publication noticed that Tanzania exported a lot of Gold to Burundi and Uganda between May 2020 and June 2021.  At the height of Covid-19 lockdowns, the two countries’ exports outside EAC were in negative territory.

Burundi’s extra EAC trade was negative 7 percent in May 2020 while Uganda’s was negative 54 percent. Then in June of that same year, Burundi’s extra-EAC trade rose sharply to 67 percent, and an astonishing 804 percent in July, before declining to 54 percent in September, according to a Trade Mark East Africa (TMEA) Report.

Uganda’s exports too, rose from negative 54 percent in May 2020 to 15 percent in June, 31 percent in July, and declined to 16 percent in October. The sudden increase, said the TMEA Report, “ were in correlation with an increase in mineral exports.” The top mineral export here was gold.

 Such sudden increases in gold exports were baffling: Why did Tanzania, Export gold to Burundi and Uganda?  Tanzania, reputedly the fourth largest gold producer in Africa, produces anything between 40 MT and 55 MT of gold a year. Uganda, on the other hand, produces just 8MT of gold a year while there is no record of gold production in Burundi.

Tanzania exported Gold worth US$1 billion to Uganda Last year, but Uganda exported gold worth US$3 billion official data shows. Yet Uganda mines less than 8000 kgs of gold a year, says www.impacttransform.org.

 According to Business Insider www.africa.businessinsider.com at the then-ruling gold price, Uganda exported 45,988 kilograms of gold in the year to February 2024.

Given that she produces only 8 tons of gold, where did the other 38tons come from? Based on  the Business insider analysis, Uganda imported 15.33 tons of gold from Tanzania. This brings the total to 23.33 tons. So where did the balance, 22.6 tons come from?

This is the elephant in the room.  What has made Uganda the hub for gold trade in East Africa?  A 2021 report by Global Initiatives https://riskbulletins.globalinitiative.net, accuses Uganda of being the conduit for Gold smuggled from D R Congo, South Sudan, and Kenya in that order.

 The report, Risk Bulletin of March-April 2021, questions the population of Uganda’s Gold Refineries, given its output. The country now has seven registered gold refineries, which critics have pointed out far exceeds Uganda’s actual production needs and raises questions about the “provenance of gold being refined in the country.”

This finding is supported by report by a Kenyan business Publication, www.Kenyanwallstreet.com.  Quoting a Swiss Aid report, the publication  says that a large proportion of gold imported into Uganda is not declared in the stated countries of origin. Some consignments, declared with customs as Tanzanian, were by Congolese from DR Congo, say the report. Other consignments were by individuals owning companies operating in DRC. In other instances gold imports into Uganda were declared as from countries that virtually no gold deposits. Among these is the Gambia concluded the  report.

Uganda is an attractive market for illicit gold due to  a combination of factors such as; the ease with which gold can be moved and traded, Competition among well-resourced buyers  leading to competitive prices,  and Low export royalties contributing  to a larger profit margin. Insecurity in both eastern DRC and in South Sudan also makes Uganda an attractive destination for smuggled gold from those countries.

According to the report, the Ugandan gold refinery African Gold Refinery (AGR) appears numerous times in official statistics on gold imports into Uganda. This refinery and its founder and former director, Alain Goetz, have been placed under sanctions by the American and European authorities because of their involvement in the illegal trade in gold from the DRC.  

Kampala’s refineries in particular are thought to be key nodes in regional illicit gold supply chains, connecting mines to international transit and destination hubs. Gold dealers in Kampala also reported that almost all the gold shops and companies in the city have agents with direct links to the large gold producers in eastern DRC

 Of particular interest is why Tanzania, a leading gold producer, exports gold to Uganda. Doesn’t it have gold refineries of its own and why? Which leads to another question: Was Kenyan President Ruto being cynical when he congratulated Tanzania for beating Kenya’s exports to Uganda?

 

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