SWISSAID Report Uncovers Alarming Levels of Undeclared Gold Production and Trade in Africa

New findings reveal significant gold smuggling from Zimbabwe and across Africa, highlighting the urgent need for better regulation and transparency.

small scale miner with gold in zimbabwe

New findings reveal significant gold smuggling from Zimbabwe and across Africa, highlighting the urgent need for better regulation and transparency.

Zimbabwe’s Undeclared Gold: A Closer Look

A recent report by SWISSAID, titled “On the Trail of African Gold: Quantifying Production and Trade to Combat Illicit Flows,” has uncovered substantial discrepancies in the gold production and trade figures for Zimbabwe. The report suggests that over 55 tonnes of gold produced by Artisanal and Small-scale Miners (ASM) in 2022 were not properly declared. This highlights significant gaps in the official records, raising concerns about widespread gold smuggling and the resultant economic impact.

According to the report, while over 40 tonnes of gold produced by ASM was properly declared, the Reserve Bank of Zimbabwe (RBZ) statistics indicate that only around 24 tonnes were declared by artisanal miners in 2022. This discrepancy suggests that a large portion of the gold produced is being illicitly channeled out of the country.

Economic Implications of Gold Smuggling

The economic repercussions of gold smuggling are severe. The Ministry of Finance in Zimbabwe has reported losses amounting to approximately US$1.8 billion in mineral revenues, primarily due to gold smuggling. Minister of Home Affairs, Hon. Kazembe Kazembe, has also highlighted that Zimbabwe loses about US$100 million worth of gold each month through international smuggling rings and the country’s porous borders.

Undeclared Gold Production Across Africa

The issue of undeclared gold production is not confined to Zimbabwe alone. The SWISSAID report reveals that each year, between 321 tonnes and 474 tonnes of gold produced through ASM in Africa go undeclared. This represents a value of between USD 23.7 billion and USD 35 billion at the gold price on May 1, 2024. In 2022, undeclared ASM gold production accounted for 72% to 80% of total ASM gold production and 32% to 41% of total gold production on the African continent, encompassing artisanal, small-scale, industrial, and semi-industrial sources.

High Levels of Undeclared Gold in African Countries

Nine African countries reportedly have undeclared ASM gold production exceeding 20 tonnes per year. Overall, total gold production in Africa reached between 991 tonnes and 1,144 tonnes in 2022, representing between a quarter and a third of global mined gold production for that year. More than half of the gold extracted in Africa in 2022 came from ASM operations.

A staggering 41 out of 54 African countries have an estimated ASM gold production of at least 100 kg per year. However, 15 of these countries produce ASM gold without officially reporting any production. This lack of transparency underscores the challenges in regulating and monitoring the sector.

Comparison of Gold Production and Trade

The vast majority of African gold that is not declared at the production stage or for export is later declared for import into non-African countries. This transformation from illicit to legal status occurs predominantly through channels leading to the United Arab Emirates (UAE). Import data comparisons indicate that undeclared ASM gold production in Africa is likely at the high end of SWISSAID’s estimates, reaching up to 474 tonnes.

The Role of the UAE and Other Countries in Gold Trade

In 2022, more than 435 tonnes of gold were smuggled out of Africa, equivalent to more than a tonne a day, valued at USD 30.7 billion at the gold price on May 1, 2024. The overwhelming majority of this gold was imported into the UAE before being re-exported to other countries. The report highlights that 66.5% (405 tonnes) of the gold imported into the UAE from Africa in 2022 was smuggled out of African countries.

Between 2012 and 2022, the UAE imported 2,569 tonnes of African gold that was not declared for export in African countries, valued at USD 115.3 billion at the average gold price over those eleven years. Twelve African countries are involved in smuggling more than 20 tonnes of gold annually, with Mali, Ghana, and Zimbabwe being the primary hotspots for gold smuggling.

Global Trade Destinations for African Gold

The majority of African gold is shipped to a few key countries. The UAE, Switzerland, and India were the top importers of African gold between 2012 and 2022. In 2022, nearly 80% of African gold exported abroad went to these three countries, with over 47% going to the UAE alone. The percentages are even higher when correcting for artificial statistical discrepancies.

Most African industrial gold was exported to South Africa, Switzerland, and India, while 80 to 85% of African ASM gold was exported to the UAE. During the same period, declared intra-African gold trade largely involved South Africa as a destination country, though most of the gold imported into South Africa was subsequently re-exported to non-African countries.

Data Challenges in the Gold Sector

SWISSAID’s investigation into gold production and trade data in Africa revealed significant challenges. Much of the data is not publicly available or does not exist. Many figures were found to be erroneous, incomplete, inaccurate, unreliable, or inconsistent. Notably, the statistics on the gold trade provided by South African authorities were found to be particularly opaque, failing to give an accurate picture of the gold trade in the country.

The Need for Improved Regulation and Transparency

The findings of the SWISSAID report underscore the urgent need for improved regulation and transparency in the gold mining and trade sectors in Africa. Addressing these challenges is crucial for combating illicit flows, safeguarding national revenues, and ensuring that the benefits of mineral resources are fully realized for the development of African countries. Enhanced regulatory frameworks, better data collection and reporting, and international cooperation are essential steps toward achieving these goals.

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