LEADER
Protecting Africa’s natural wealth I
N the midst of ongoing conflicts in parts of Africa, the countries involved are regularly losing their natural resources to foreign bodies. The people seldom benefit from such wealth, as is quite clearly the case in a country such as the Democratic Republic of Congo. There are some 120 militias and armed groups actively roaming around in the eastern part of the country. These so-called rebels are busy exploiting the DRC’s natural resources for themselves and foreign interests. The underlying problem is the role of external groups in moving the natural resources out of the country and on to the international market. The DRC government has not been able to stop this, given that the country has been mired in conflict for decades. The exploitation of Africa’s natural wealth by foreign groups is nothing new. In the 1960s and 1970s, when mercenary activities were rife on the continent, the soldiers of fortune from Western Europe helped themselves to gold and diamonds. Now, the new group on the scene is Russia’s Wagner Group, which first appeared in the Central African Republic. It has extended its reach to Mali, where French forces were kicked out by the military regime to accommodate the Russian private military group. The Wagner Group has been accused of funding its operations in part by exploiting natural resources in countries like the CAR and Mali. Indeed, the Group has fine-tuned its exploitation of revenue streams from Africa through companies that are involved in gold mining in the CAR. The gold sector is critical to the economies and communities of many countries in sub-Saharan Africa. which produces about 25 per cent of the world’s gold each year. These gold-producing countries would naturally want to ensure that the sector is rid of predatory and malign actors. African countries do not seem to have the power to stop the illicit operations in their gold mining sector. The problem is that the companies operating in this area, such as the ones run by the Wagner Group, sell their ill-gotten gold abroad, where 6
sub-Saharan Africa.
African countries have less clout to halt the illegal trade.
The international community has been making important progress toward addressing these concerns by helping industry participants identify, evaluate, and reduce risks, particularly downstream in key trading and refining centres for gold from sub-Saharan Africa such as the United Arab Emirates and Switzerland.
The US, though, which has a robust sanctions regime in place, has been taking action to disrupt the business of these illicit gold companies. Recently, Washington sanctioned two companies in the CAR that are affiliated with the Wagner Group and its founder and leader, Yevgeniy Prigozhin.
Of course, the advisory is not intended to replace existing due diligence guidelines, processes, or underlying reports, but rather to provide a streamlined resource that amplifies and encourages more transparent public reporting by companies implementing them, as the Americans point out.
At the same time, the US issued a new advisory focused on the gold sector across sub-Saharan Africa, highlighting risks related to the gold trade, including conflict and terror financing, money laundering activities, sanctions evasion, human rights and labour rights abuses, and environmental degradation. It calls on American businesses to undertake responsible investment in all aspects
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However, malign actors continue to exploit vulnerabilities in the gold supply chain across sub-Saharan Africa, in some
Malign actors continue to exploit vulnerabilities in the gold supply chain across subSaharan Africa
of the sector: mining, trading, refining, manufacturing, and retail of end products. But there are still many risks that are directly and indirectly connected to the gold sector in sub-Saharan Africa. For instance, without adequate due diligence, an industry participant may inadvertently contribute to conflict and terror financing, money laundering, corruption and sanctions evasion.
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The US points out that while these concerns have been well known and extensively documented for many years in certain regions, such as eastern DRC, there are newer risks in places like Sudan, CAR, and Mali involving the Wagner Group. In trying to protect these natural resources from falling into the wrong hands, the continent’s leaders must be aligned with the US government in its commitment to addressing the relationship between gold and the illicit revenue streams that contribute to and fund conflicts, corruption, and other concerns in AFRICA BRIEFING JULY - AUGUST 2023
cases with relative ease. Local armed groups in several conflict-affected regions have used the gold trade to finance their activities for decades, and armed entities hostile to American interests are also increasing their presence in sub-Saharan Africa’s gold trade.
These groups include jihadists, some with links to Al-Qaeda and the Islamic State, as well as the Wagner Group. Gold’s role as a store of value and currency, in addition to being a material used in other supply chains, further exacerbates these challenges. The American government has warned that those in the industry should be prepared for increased US government attention to the relationship between gold and these groups’ revenue streams and should be prepared for the possibility that US sanctions could be used to disrupt these groups’ operations. African gold-producing countries should welcome this American initiative and back it fully. AB