African governments are adding to the pressure. Besides Sudan, authorities in Nigeria, the Democratic Republic of Congo (DRC), Zimbabwe, Mali, Ghana, Burkina Faso, Central African Republic and Niger complain that tonnes of gold leak across their borders each year, and they allege most of it heads to Dubai.
“It’s a huge loss,” Nigerian mines minister Olamilekan Adegbite said in an interview in his office in Abuja, the capital, where glass cabinets display rock samples that illustrate the nation’s mining potential, so far largely untapped.
The bulk of Africa’s illegally mined gold is channelled to Dubai through refineries in countries such as Uganda and Rwanda, or is flown there directly in hand luggage, often with false papers, according to government and industry officials, UN experts and civil rights groups. Once there, it can be further melted down to obscure the source before being turned into jewellery, electronics or gold bars, they say.
“Most European countries will ask you for your certificates of export from the country of origin,” said Adegbite. “If you do not have that, the gold is confiscated and returned back to source.”
On paper, the UAE requires the same. “But, you see,” Adegbite added, “in Dubai they look the other way.”
The UAE’s foreign trade ministry declined to answer questions on gold from Africa. Bin Sulayem said in an interview that a global ban on gold hand-carried on airlines — a traditional means of smuggling — would fix the problem. “We have a better track record than any of the major cities,” he said. “The main complaint we’re getting is ‘you’re too tough’.”
Gold smuggling is an age-old practice, but it became all the more rewarding as the price of bullion soared to a record $2,075/oz in August 2020. The illicit trade has since taken off like never before in Africa and authorities there have made scant headway in reining it in, an analysis of publicly available data from governments and other sources show.
Sudan’s finance ministry, for example, estimates that 80% of gold production goes unregistered. Rwanda is set to ship $732m worth of the metal this year, more than two-and-a-half times the value of its 2019 exports, according to IMF figures. That is despite Rwanda barely mining any gold of its own, prompting accusations from the government in neighbouring DRC that the precious metal originates from its territory.
Rwanda is working to become a regional mineral processing hub, which accounts for its increased exports, the Rwanda Mines, Petroleum and Gas Board said in a statement. It has invested in new facilities which “source raw materials from local and regional operators in compliance with legal and regulatory requirements”, the board said.
Reports from the UN and other sources point to 95% of production from eastern and central Africa ending up in Dubai. That is a potential problem because much of the region is designated by the OECD as a conflict or high-risk area, meaning companies are required to show that imported gold is responsibly sourced. The EU brought in legislation in 2021 aligning it with US efforts to stem the trade. However, enforcement is notoriously difficult.
Uganda, one of Africa’s main refiners of informal, or artisanal gold, more than doubled its exports this financial year to about $2.25bn, central bank statistics show. Again, the UAE was by far the top destination, according to UN trade data. The UN has accused Uganda and Rwanda of trading in gold smuggled from neighbouring eastern Congo, a region mired in conflict.
We’re trying to be a real hub when it comes to gold trading. So we welcome the world, we welcome anyone who wants to do trade …UAE foreign trade minister of state Thani al Zeyoudi.
In an unprecedented move, the London Bullion Market Association (LBMA), which regulates the world’s biggest gold market, in 2020 threatened to bar its accredited refineries from sourcing metal from countries that did not meet its responsible-sourcing standards. While it did not name any state, Bin Sulayem issued a rebuke on behalf of Dubai, accusing the association of trying to undermine the UAE’s gold market.
The UAE signed up to the LBMA’s recommendations and “has long been co-operative with all international regulations and best practices including anti-money laundering efforts and unethical sourcing of gold,” foreign trade minister of state Thani Al Zeyoudi, said in a statement to Bloomberg News. “The UAE is committed to embedding the very highest international gold standards.”
More than 12 months later, the LBMA has yet to follow through on its threat. Sakhila Mirza, its general counsel, said the association is still assessing what the UAE has done to combat smuggling. The LMBA does see the need for urgency, but has to act within the rules, and “disengaging is the last step”, Mirza said in an interview.
Dubai’s long association with the gold trade is evident in its main market in the oldest part of the city, where scores of shops with elaborate window displays of glittering necklaces, bodices and sunglasses line a pedestrian walkway. Trading operations are conducted in an adjacent rabbit-warren of a building, where men run between small offices, some with reinforced security doors.
Several traders who spoke on condition of anonymity because they feared repercussions said they risked having their supply cut off by Emirati refineries if they asked too many questions about where it came from. Still, controls have been tightened to tackle money laundering, with customers who spend more than $15,000 required to submit their identity documents and source of funds.
During his visit in November, the US treasury’s Adeyemo noted that stronger enforcement efforts targeting illicit finance could give the UAE a competitive advantage in the region, according to the two people with knowledge of the talks. The department declined to comment through a spokesperson for the Office of Foreign Assets Control, who asked not to be named due to the sensitive nature of sanctions policy.
