(Ecofin Agency) - A new report by SWISSAID provides unprecedented figures on gold smuggling in Africa over the 2012-2022 decade. The report reveals that Africa loses billions of dollars each year due to this illicit trade.

Between 2012 and 2022, the United Arab Emirates (UAE) imported 2,569 tonnes of undeclared gold exports from African countries, valued at over $115.3 billion. Swiss foundation SWISSAID disclosed this figure in a new report released on May 30.

Titled "Tracking African Gold - Quantifying Production and Trade to Combat Illicit Flows", the report highlights Dubai as the hub for illegally exported gold from several African countries. The report draws data from several investigations.

According to data from Comtrade analyzed by Reuters in a 2019 investigation, there was a discrepancy of $3.9 billion between what the UAE claims to have imported from 21 African countries and what these countries officially exported to the federal state. In its new report, SWISSAID says the gold was smuggled mostly from artisanal and small-scale sites.

The report estimates that 66.5% (405 tonnes) of the gold shipped to the UAE in 2022 was smuggled out of Africa. In total, 435 tonnes representing a value of $30.7 billion as of May 1, 2024, were smuggled out of African countries in 2022.

Some countries are more affected than others. Most of the gold from artisanal and small-scale African mines is not declared for export. According to the study authors, 15 out of 54 African countries produce gold artisanally or at a small-scale, but officially report no production.

For example, Mali officially reported artisanal gold production of around six tonnes per year since 2016. Meanwhile, the SWISSAID report estimates the real figure between 30 to 57 tonnes. Along with Ghana and Zimbabwe, Mali is among the three African countries where gold smuggling is most significant.

"African states have virtually no control and receive no revenue from these flows. The lack of state control also implies an increased risk of forced labor, child labor, health hazards, or even worker deaths, environmental pollution, and financing of armed groups," the report denounces.

The Role of Switzerland

While the UAE is the primary destination for smuggled African gold, the Gulf state is only a transit point, albeit a very important and strategic one, between mines and refineries. The smuggled gold often ends up in Switzerland which houses four of the world's nine biggest refineries. Also, between one-third and one-half of the world's gold imports pass through the European country.

Switzerland could thus play a major role in combating gold smuggling from Africa by tightening its import regulations. Currently, the regulation makes the last place of gold transformation the place of origin, resulting in a situation where gold imported from the UAE is considered Emirati, even though the country has no gold mines.

"This situation is problematic because for many years potentially conflict-linked or human rights-violating smuggled gold has landed in Switzerland, legally," said Marc Ummel, head of the raw materials unit at SWISSAID and co-author of the study. Ummel called on Swiss lawmakers to strengthen the legal framework for tracing raw materials to help reduce gold smuggling from Africa.

Apart from such external measures, the most challenging and arguably most effective task remains to tackle the source directly by fighting against illegal gold exports from African countries. Aware of the problem and its implications beyond revenue loss (environmental and health impacts related to artisanal gold production), African states are striving to combat these smuggling circuits. Crackdowns on illegal miners and the establishment of official purchasing centers are among the measures used.

According to a report by the ECOWAS, current national initiatives must be strengthened by cooperation between African countries and the formalization of artisanal miners who, as SWISSAID states, "simply seek to make a living, have no choice but to work in the informal sector, and have no criminal intent."