Gold laundering capital?

Uganda bets on ICGLR’s mineral certification mechanism as it battles for legitimacy in the global gold market

COVER STORY | RONALD MUSOKE | For years, Uganda has carried the uncomfortable label of being “the gold laundering capital of Africa.” Watchdog reports, including investigations by the UN Panel on the Illegal Exploitation of Natural Resources in the Democratic Republic of Congo (DRC), have pointed to tonnes of untraceable gold and other precious minerals originating from conflict-prone countries such as the DRC and South Sudan, which are then refined in Kampala before being exported to Dubai and Europe with a “Made in Uganda” stamp.

However, Kampala has consistenly denied the allegations claiming that it has huge gold deposits dotted across the country. In a bid to address this long-standing controversy once and possibly for all, the government moved to strengthen its credibility in the global precious metals market with the November 2023 adherance to the Regional Certification Mechanism (RCM)—one of the tools adopted by the 12-member International Conference on the Great Lakes Region (ICGLR) to curb the illegal exploitation of natural resources. However, one question still persists: how much of Uganda’s gold is genuinely Ugandan?

The RCM is one of six instruments under the ICGLR’s Regional Initiative Against the Illegal Exploitation of Natural Resources (RINR), which was launched in 2009. Its main objective is to break the link between minerals and conflict by introducing traceability and verification across supply chains. By tracking high value minerals such as; gold, tin, tantalum, and tungsten—the so-called “3TG minerals”—from mine to market, the mechanism seeks to close loopholes exploited by smugglers and organized criminal networks.

The protocol emphasizes principles of transparency, accountability, equity, and respect for environmental and human rights standards. It also introduces oversight measures such as third-party audits to ensure compliance. These align with international frameworks like the US’s Dodd-Frank Act and the Organization of Economic Cooperation and Development’s (OECD) Due Diligence Guidance, both of which target conflict minerals in high-risk areas such as the Great Lakes region of Africa.

However, inspite of the promise, implementing the RCM faces significant hurdles as smuggling remains rampant across porous borders where enforcement can be weakened especially with bribery. “The Regional Certification Mechanism is a great initiative in addressing the issue of smuggling, but more regulation and inter-country co-operation is required to ensure effective enforcement,” Gloria Mugambe, the head of the Uganda chapter of the Extractive Industries Transparency Initiative (UGEITI), recently told The Independent.

“Remember, gold can be transported in an individual’s pockets or any other small niche, so whereas the more significant amounts, like those from refineries which have to get official documentation to be exported will be tracked, smaller unrefined amounts will continue to be smuggled,” she said.

“The regional certification mechanism (RCM) is not a domestic but regional tool, applicable in 12 member states of the ICGLR (and) so you need it to be operational and successful in neighbouring countries for it to be successful in Uganda,” added Don Bwesigye Binyina, the Executive Director of the African Centre for Energy and Mineral Policy (ACEMP), a Kampala-based non-profit.

Binyina says that although the RCM was endorsed in 2010, only five countries within the ICGLR fold have domesticated it to date. He adds that the RCM is also one of the six tools of the Regional Initiative Against the Illegal Exploitation of Natural Resources (RINR) Protocol under the ICGLR. “So, the other five tools of the RINR need to be fully activated, operational and successful in Uganda and the other ICGLR member states,” he said.

Ten years late to the party

The good news, however, is that Uganda became fully compliant with the ICGLR’s Regional Initiative against the Illegal Exploitation of Natural Resources (RINR) in November 2023, a decade after Rwanda and the Democratic Republic of Congo.

Grace Nassuna, the Assistant Commissioner for Geoscience at the Ministry of Energy and Mineral Development, insists Uganda has made significant progress. She, for instance, notes that in September 2015, Uganda approved the domestication of the provisions of the ICGLR Pact and associated protocols. Parliament passed the ICGLR (Implementation of the Pact on Security, Stability and Development in the Great Lakes Region) Act, Cap 188 to give the ICGLR legal force and allow Uganda to participate more effectively in regional efforts to achieve the ICGLR objectives.

“Uganda has since enacted the ICGLR Act, 2018; put in place the ICGLR Regulations, 2023, come up with the certification guide to 3TG miners, 2023. Uganda has also put in place guidelines for the implementation of the Chain of Custody (CoC) systems in Uganda,2023, as well as guidelines for third party audit of exporters, 2023,” she said in April this year, during a virtual meeting organized by the ICGLR to discuss the opportunities and challenges of the mechanism that has been adopted by the regional governments to tackle illicit exploitation of minerals.

Nassuna who is also an ICGLR Regional Committee member explained that Uganda has also developed a mine site inspection checklist in 2019 and has already inspected 10 out of 51 3TG mine sites using this checklist. The country has gone ahead to develop a Biometric Registration of Artisanal and Small-Scale Miners (BRASM) database which it is using to register artisanal miners and was used in 2019 for the biometric registration of artisanal and small-scale miners. Already, close to 6000 of the estimated 15,000 artisanal and small-scale miners have been registered at 21 gold mining sites across the country.

She said Uganda has managed to control illegal exploitation through encouraging formalization of Artisanal and Small-scale mining, which has led to economic growth especially in the artisanal gold sector, fostering stability by controlling gold rushes and reducing conflict across borders.

Nassuna said Uganda has also established a regional certification unit. “We now have a unit, and this was developed in 2019 with 10 staff; we have mainstreamed the unit into the Ministry of Energy. We have talked to public service to mainstream it, to make it permanent and pensionable, and we also requested for 18 more positions. The structure has been approved, and we are going to begin to recruit.”

On the ground, a different story

In the gold-rich hills of Kassanda and Mubende districts, in central Uganda, miners work under the punishing sun. Pickaxes bite into reddish earth, the air filled with the cacophony of makeshift generators. Here, the ICGLR’s grand talk of certification means little.

“Ugandan miners who know about the RCM are negligible,” says Emmanuel Kibirige, who has been mining gold for 11 years and is now the Secretary General of the Uganda Association of Artisanal and Small-scale Miners. “I am one of the miners who interacts a lot with other artisanal and small-scale miners around the country and I know that they know nothing about the RCM… even me as a liberatd miner, I have no interest in getting to grips with how the ICGLR’s RCM works,” he recently told The Independent.

“We sell our gold on site. These certification schemes come from Europe to frustrate local ventures. They require consultants who charge up to US$100,000 — money we don’t have,” he added. Kibirige says the RCM won’t stop smuggling because the problem isn’t in the mines. “Smuggling happens at the borders. And there’s no machine to distinguish the DNA of Congolese gold from Ugandan gold,” he says.

He claims that “the European countries behind the RCM just come up with these initiatives to frustrate local mining ventures.” “They want us to get permission to mine after being verified by an expert who comes from their home countries and these consultants charge between US$30,000-100,000,” Kibirige told The Independent, adding that, Uganda’s artisanal miners are satisfied with the money they earn locally.

Kibirige notes that the RCM is meant to make mining an expensive venture for the indigenous miners in favour of Western multi-national companies with huge capital. He argues that gold smuggling across the borders in the region is more of a security issue than a mining issue.

A loophole the size of a border

Yet Uganda’s location on the Great Lakes regional map makes it a natural gold transit hub. It shares long, porous borders with the DR Congo and South Sudan, countries where artisanal gold mining thrives and armed groups operate.

It also appears Uganda’s very success in attracting gold refineries is part of the problem. The country’s gold refinery-friendly laws have drawn investors and traders from across the region, including those looking to “wash” gold of questionable origin. Since 2014, Kampala has seen a surge in privately owned refineries, with many processing gold far in excess of the country’s reported gold-mine output.

SwissAid dossier on Uganda

A continent-wide study done over three years starting in 2021 by Swiss non-profit, SwissAid, found that Uganda is one of the transit countries where large quantities of gold are not declared on import.

The study published in May, last year, under the title, “On the trail of Africa gold: Quantifying production and trade to combat illicit financial flows,” notes that Ugandan customs statistics for the years 2018 to 2021 that SWISSAID managed to obtain, showed that the country of origin of gold imported into Uganda has often been incorrectly declared to Ugandan customs.

“The vast majority of gold imported into Uganda has not been declared for export in the countries of origin,” the SWISSAID study noted. “In particular, the DRC hardly ever appears as a country of origin in these statistics (imports of just 0.7 tonnes in 2018), even though the existence and scale of gold flows from the DRC to Uganda have been amply documented, in particular by the UN Group of Experts on the DRC and various civil society organisations.

“In addition, consignments of gold have been declared to Ugandan customs as coming from Tanzania by individuals with Congolese (DRC) nationality, which is a red flag. Similarly, consignments of gold have been declared as coming from South Africa or Tanzania by individuals owning companies operating in the DRC.”

“Several tonnes of gold a year have been declared for import into Uganda from countries with virtually no gold production, such as The Gambia. Once again, this is a red flag that there is reason to suspect the existence of illicit gold flows from other countries,” the report reads in part.

Mugambe of UGEITI thinks Uganda attracts a lot of gold imports because of its conducive refinery environment. “The government has passed enabling legislation for refineries to operate freely once they have met all the attendant requirements, and this has attracted many investors to set up refineries, as well as individuals with gold for refining,” she said.

“If you look at the region and where much of this gold is coming from, Uganda is the most peaceful country,” added Onesmus Mugyenyi, the Deputy Executive Director of the Advocates Coalition on Development and Environment (ACODE), a Kampala-based public policy thinktank.

Mugyenyi who keenly follows the extractives sector in the Great Lakes region explains that since much of the gold from Sudan, South Sudan, the Democratic Republic of Congo and the Central African Republic has been branded as “’bloody gold,’ it means that there is more scrutiny on anyone who attempts to source the precious metal from any of those countries, compared to Uganda. “Uganda has therefore portrayed itself as a source of gold that is clean and there is no war happening here,” he says.

Senior government officials insist that Uganda has its own significant gold deposits. “This is a country where gold is sometimes discovered as people dig graves. Even a lightning bolt striking a hill can reveal gold on the surface. This is the Pearl of Africa,” Ruth Nankabirwa, Uganda’s Minister of Energy and Mineral Development, boastfully told enthusiastic listeners during the recent commissioning of Euro Gold Refinery Ltd, the newest gold refinery in Kampala.

But Mugyenyi of ACODE thinks this argument is just part of the narrative that is deliberately being perpetuated to justify Uganda’s huge gold exports. “They often say Uganda has a lot of gold but they are not able to do the tracing because much of this gold is in smaller quantities across the country and is being mined by small scale miners, some of whom are illegal but it is not ‘bad gold’,” he told The Independent.

“ They even justify why actually small-scale miners are important because they say it is not just about mining; it is a source of livelihood. They say there are communities around the country that have been involved in small scale mining for the rest of their lives and the government cannot just stop them (suddenly) – and that they are working towards formalising them to enable th government capture their quantity of production.”

“So, in a way, we are even reluctant to quantify the gold production because then we undermine ourselves… we seem to be saying that the country is producing much gold when actually it is not correct that we produce that much gold,” Mugyenyi said.

The numbers don’t add up

It is this mismatch between production and exports that continues to haunt Uganda in both local and international fora. Official figures suggest Uganda mines only a fraction of the gold it exports. The rest, watchdogs maintain, comes from neighbouring states, often without proper export permits from their countries of origin.

In 2023, Bank of Uganda reported that the country’s gold exports had risen more than ten times (US$2.3billion compared to US$201 million a year earlier). In 2022, the Observatory of Economic Complexity, an online platform that analyses global trade data, noted that Uganda exported US$1.9 billion worth of gold but only imported US$3.72 million worth of gold.

Meanwhile, in November 2024, Daily Monitor, a national independent newspaper, analysed data from the Uganda Revenue Authority which showed that over 46,000kg of gold worth US$2.98 billion (Shs 11.3 trillion) was exported between June 2023- June 2024.

So far, the ICGLR Audit Committee, chaired by Kenya’s Philip Kirui, has accredited auditors to monitor mine sites and exports in the region. But only five of the 12 member states have implemented the RCM. “The mechanism is only as strong as its weakest link,” says Binyina of the Africa Centre for Energy and Mineral Policy. “You need all six RINR tools, not just the RCM, and you need all neighbours on board.”

Good law, bad politics

To Siragi Magara, the Extractives Industries Coordinator at Oxfam-Uganda, the problem is not the lack of regulation but the lack of political will among the governments in the region.

“It looks like the RCM was ratified for PR purposes,” he says, adding that lack of formality in the minerals sector is not only in Uganda but also in the entire Great Lakes region region, with powerful actors being key beneficiaries.

Even then, ICGLR admits that gold is uniquely hard to trace. “Its high value-to-volume ratio makes it easy to smuggle,” Gerard Nayuburundi, the ICGLR’s regional natural resources coordinator noted during the virtual meeting back in April, this year.

Mugyenyi, however, insists that without cooperation from global buyers like the EU, Dubai, and India — who need to reject uncertified gold purchases — Uganda’s reforms will stall.

“The cycle cannot be completed unless the market is denied for the minerals whose source has not been certified,” he told The Independent, adding that the same deforestation-free regulations that are being slapped on coffee, cocoa or rubber by the EU should also be applied to gold production.

Meanwhile, Mugambe of UGEITI says the RCM is a good initiative, and will indeed contribute to the improved regulation of regional gold trade. However, she notes that EITI membership and the formalisation of artisanal and smallscale sectors are the other two tools that need to be fully implemented to enhance transparency and accountability of the region’s precious minerals trade.

For now, Uganda’s gold industry remains a glittering contradiction: a lawful facade with shadowy backrooms, a country striving for transparency while quietly profiting from opaqueness of the sector. And, although ICGLR’s RCM may be a step toward redemption, as long as porous borders, informal miners, and willing foreign buyers exist, the “gold laundering capital” crown will be hard to dislodge.