Artery for West Africa's Booming Illegal Gold Trade

West Africa's lucrative gold trade has a costly dark side. Discrepancies in data on gold production and trade between Mali and Dubai in the United Arab Emirates (UAE) expose a massive illegal business, particularly in the artisanal mining sector. These illicit dealings not only strip West African countries of billions of dollars, but fuel conflict through the financing of violent extremism, writes Abdelkader Abderrahmane for the Institute for Security Studies.

Mali taxes only the first 50 kg of gold exported per month, incentivising gold smugglers to ship the metal from Mali for a large tax break. This makes the country a magnet for the illegal gold trade in West Africa, which lacks a regional tax coordination framework.

Mali is also used as a gateway to UAE gold markets by its neighbours and beyond. Libya and Venezuela recently used Mali as a platform to export their gold illegally to Dubai. In 2020, gold trafficking to Mali apparently brought about U.S.$1 billion to the government of Nicolás Maduro in Venezuela.

Many west African artisanal miners struggle to finance their activities, they take loans from Emiratis that can only be paid back through exporting their gold to the UAE. This isn't necessarily illegal, but most of this gold is probably exported through illicit channels.

Mali's tax incentives are attractive for neighbouring smugglers. West African states should harmonise their tax policies and regulations on gold, starting with better coordination among countries in the Economic Community of West African States. Smugglers would then have fewer commercial route opportunities.