Mutare — Corruption, and criminality in the artisanal gold mining sector have increased the severity of environmental damage in protected areas and national parks across the region, a new study has shown.

Key findings of research conducted in East and Southern Africa show that the illicit gold trade has proliferated during the pandemic albeit with an ecological cost.

The study, Illicit Gold Markets in East and Southern Africa, was reviewed by the Global Initiative against Transnational Organized Crime (GI-TOC), unpacks several factors which shape and drive gold trade in South Sudan, Uganda, Kenya, Zimbabwe, and South Africa.

Key findings of the study provide insight into national and regional market dynamics and trade flows in a nuanced analysis of market dynamics, supply chains, and networks as well as drivers of illicit gold trade in the region.

Findings also show that, while Artisanal and Small scale Gold Mining (ASGM) is now increasingly governed by comprehensive legal and regulatory frameworks, regional laws still facilitate transnational supply chain links to international gold hubs.

This increase in environmentally harmful ‘illicit activities in gold-rich markets has undermined the potential for this precious commodity to be a catalyst for development in these regional African markets,’ ravaged by the Covid pandemic.

“The stress on gold markets during the COVID-19 pandemic highlighted the strength and resilience of illicit gold markets. While legal gold mining operations and buyers were shut down in many countries by national lockdowns that placed severe restrictions on movement and trade, illegal mining and trade were only temporarily stalled or suffered from minimal disruption.”

“Criminal and corrupt actors will use corruption and violence, as well as financial levers to profit from and control the trade. For example, foreign actors, who operate illegally or in collaboration with corrupt government officials, often introduce new techniques or technology that amplify negative environmental impacts.

“This is the case in Zimbabwe where the government is allowing mining in protected areas, such as the Matobo and Umfurudzi national parks, and has lifted a ban on riverbed mining, a practice with detrimental environmental consequences,” reads part of the report.

The study also notes that the illicit gold trade is fueled by weak regulatory frameworks in terms of access to land and mineral rights, which limits legal operations by artisanal miners and thereby creating conducive conditions for illicit gold markets to prosper.

Criminal and corrupt actors are also using violence, as well as financial levers to profit from and control the trade, ‘often hidden behind a diffuse web of supply chains, financial flows and intermediaries’, this study noted.

Although the networks are ‘loose’, this does not mean they are not well entrenched or well controlled. Networks tend to be transactional, driven, and controlled by a limited number of individuals at key points in the chain.

“Without clear, up-to-date, and functional cadastres to define property rights over mineral deposits, violence and corruption become the tools for controlling extraction. As a result, informal mining operators struggle to comply with regulatory demands and are increasingly reliant on criminal actors who aggressively seek to maximize profits from illicit gold markets.

“… the gold trade draws criminal actors owing to its high-return, low-risk nature (especially when compared to the trade in other commodities, both licit and illicit). Inherent characteristics of gold (such as anonymity, ease of movement, and global fungibility) attract illicit actors to the gold sector, who then exploit vulnerabilities in the system,” states the report.

People in positions of power, especially state actors such as officials and politicians, were singled out as taking advantage of prevailing obscurity in the gold sector to seize vast tracts of land and compete for mineral wealth.

For example, a significant issue that fuels illicit gold markets is access to land and mineral rights, as ‘regulatory frameworks can make it difficult for small operators to legally mine gold deposits, creating the conditions for illicit gold markets to form’.

Mukasiri Sibanda, regional advisor of Tax Justice Africa Network, co-author of the study notes that artisanal mining is a livelihood activity for many African communities while the government has done little to regularize and formalize artisanal mining.

“Artisanal mining has now become a significant player in the gold sector, especially in Zimbabwe where the output from artisanal miners is surpassing production volumes of large-scale operators. Understanding drivers of this sector is key for policy interventions,” he said.

The report urges African governments to adopt progressive legislation, target key actors, financial flows, and transit points, strengthen relationships with ASGM stakeholders, establish and maintain electronic cadastres to fight illicit gold trade.

Other recommendations also include a call to develop innovative responses to curb criminality, seek to responsibly source gold directly from source countries, adopt more stringent due diligence practices for recycled gold, increase cooperation between government agencies as well as including ASGM in security strategies and peace operations.

“Developing independent and dependable electronic cadastre systems is crucial to bringing clarity to the ASGM sector. Without clear, up to date and functional cadastres to define property rights over mineral deposits, conflict and corruption become the tools for controlling extraction,” read part of the study.

South Sudan, Uganda, Kenya, and Zimbabwe were selected for field research, with some limited research conducted in South Africa including identifying significant mining areas and examining market structures and distribution systems.