Tracing Uganda’s intricate gold trade

Artisanal miners panning gold in a mine in Moroto District. Gold trade is highly secretive PHOTO | HALIMA ABDALLAH

Wednesday, 04 November, 2020

Summary

  • It is a willing seller-willing buyer phenomenon, especially at different sites operated by Artisanal and Small Scale Miners.
  • Outside the mine, however, gold trade becomes a complex affair. The market gets murky as soon as it leaves the mines.

By HALIMA ABDALLAH, The East African

Two girls asked if I wanted to buy gold. I had stopped to observe and noted something.

There was no indication that they were dealers in gold save for a heap of soil that they were panning.

“See, I have found some gold,” said the girl pointing at a shiny particle tidied out of a pile of sand-like soil mixed with water in a basin.

The two girls are residents of Rupa, in Moroto, Karamoja Sub-region, north east of Uganda.
The encounter is a miniature of how gold is traded in Uganda.

It is a willing seller-willing buyer phenomenon, especially at different sites operated by Artisanal and Small Scale Miners.

Outside the mine, however, gold trade becomes a complex affair. The market gets murky as soon as it leaves the mines.

“When we get gold, we sell it to dealers from Moroto town or Turkanas from Kenya. Sometimes, we take it to some Indians in Kampala. From there, we do not know how they proceed with it,” says an artisanal miner, who is also a gold dealer commonly known as Poshuposhu. His real name is John Bosco Mugarura.

Poshuposhu is Akarimong for low grade gold. They operate with the authorisation from Moroto local government administration and pay a monthly few.

Murky trade

Currently, gold exports have surpassed all traditional agricultural cash crops, earning Uganda $1.36b in 2019.

“The share of minerals, especially gold has increased significantly, raising doubts about data capture and transparency. How can a sector [mineral] that contributes 0.3 per cent of gross domestic product have exports of over $1b,” wonders, Dr Fred Muhumuza, a Makerere University lecturer.

Last year, Uganda helped Venezuela, which is under sanctions, to export its gold to international markets.

In 2019, according to Ministry of Finance, gold exports surged with volumes of 8,692kg valued at $363.4m sold in April from 1,714kg valued at $69.7m in March.

However, there was a drop in May to 2,198 kilogrammes valued at $89.3m.

Although, there is scanty information regarding gold volumes, research shows, artisanal and small scale miners, riding on improved mining technology introduced by immigrant miners from Tanzania and DR Congo, have enhanced production and volumes.

Sanyonja Artisanal Miners Alliance in Tiira Busia, is a small scale mining operation collaborating with Tanzania’s Nyarugusu and Gaita mines to get skills that offer protection while in the pits and environmental protection.

“We have been exporting gold, but we work with Cred Foundation, Fair Trade Africa and Fair Trade International who connect us to buyers in Britain directly,” says Simon Wabwire, the Sanyonja Artisanal Miners Alliance general secretary.

The alliance makes monthly returns to Department of Geological Survey and Mines, pays taxes, annual mineral rent fees and royalties, according to Wabwire.

However, unlike, Sanyonja Artisanal Miners Alliance, most artisanal and small scale miners do not pay taxes or royalties and have an unwritten agreement.

“We cannot declare what we earn because we have been termed illegal,” the coordinator of National Association of Small Scale Minors, only known as Emma, says.

A joint study by Centre for Research on Multinational Corporation and Centre for Research and Sustainable Solutions in 2016, for instance, estimated that 20 kigrammes of gold could be produced in every month in Kassanda District alone.

However, the same report indicates that in 2015 only 0.54 kilogrammes were exported to Korea from Kassanda District.   

Smuggling

Gold is easily transformable. It can be guised as bangles, necklaces or anything and that passes the test to cross any borders.

“Recently, we arrested a Rastafarian at Entebbe International Airport wearing gold disguised as a chain,” says Assistant Inspector General of Police, Moses Musinguzi Karakini, who is also in-charge of mineral policing. The man had been destined for Zambia.

Passing gold through metal detectors at Entebbe International Airport is not a one-man affair.
Information available to Daily Monitor indicates it is a syndicate – involving miners, dealers and security personnel.

Sometimes, the gold is smuggled out in small quantities, a gramme for example can be placed in a pocket and passes and this can be repeated several times until a large amount is smuggled out.
Musinguzi, also says, dealers get permits for first time exports, which they use to establish marketing channels abroad, before engaging in continuous smuggling.

Police says between five and eight men of Indian origin are arrested for crimes related to smuggling gold.

The smuggling is made possible by the porous borders that are most visible in Mubende, where gold is smuggled to DR Congo, Mozambique, Rwanda and Zambia.

Demand for gold is rising

Gold is used in a wide range of products- it is an essential component in electronics and computers, used in jewelry, pharmaceutical – dentistry and medicine, medals and a trade commodity.
In countries like India gold is used as security for accessing loans.

The World Gold Council predicts that demand for gold will continue to grow through 2020.

And in Uganda, the prospects of increased production is high given that some refineries have been licensed.

Dealing with  smugglers

According to Musinguzi, for  smuggling to stop, government must establish a mineral tracking team that has a presence right from the mines, processing and exports points. “Dealers must be compelled by law to declare who they sell to,” he says and notes, this helps in data tracking data on production, exports and export destinations.
 
In DR Congo, an electronic traceability system for artisanal and small scale miners is being piloted in Kampene province. The idea seeks to fish out conflict minerals, especially tin, tantalum, tungsten and gold.DRC and Uganda are under UN sanctions over conflict minerals. But data shows that Uganda’s gold exports did not significantly drop in 2008 following the sanction in 2007.

editorial@ug.nationmedia.com

SOURCE: https://www.monitor.co.ug/uganda/business/finance/tracing-uganda-s-intricate-gold-trade-2730430

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