Illegal gold mining deprives Cameroon of tax revenue
By Roland Mbonteh
Illegal gold mining in Cameroon is so rife that authorities, overwhelmed by organized criminal cartels, are not even sure how much potential revenue is lost through leakages although they agree it is in the billions of CFA Francs, the local currency. The same holds true for Cameroon’s regional neighbours.
Global policing agency INTERPOL reports that the Cameroon tax authorities in 2016 evaluated a monthly loss at nearly XAF 1 billion (about 1.8 million USD) generated by tax fraud involving organized crime in gold mining, which assumed higher proportions in 2020-21. “Renowned for its vast mineral deposits, the region of Central Africa has recently found itself in the crosshairs of internationally connected organized crime groups due to the skyrocketing price of gold during the global COVID-19 pandemic,” INTERPOL said.
“While gold mining is a traditional activity in most Central African countries, the economic uncertainties linked to the pandemic have pushed global investors towards the commodity, often seen as a safe haven in troubled times. In August 2020, the price of gold hit an unprecedented peak at USD 2,048 per ounce.”
Cameroon is itself richly-endowed with several mqineral resources including gold, mostly found in the country’s East and Adamawa Regions. The exploitation of these resources for now is carried out by artisanal and semi-mechanized teams. Permits are, however, only issued to Cameroonian artisanal miners. But the reality in the field is different, with foreign mining companies seen excavating gold with more sophisticated technology.
Justin Landry Chekoua, an official at the Mining, Biodiversity and Energy programme of the non-governmental organization Forest and Rural Development (FODER), says the companies either use national identity cards of locals in exchange for financial and small material gifts, or buy authorization from political elites in the areas. FODER operates in the East Region of Cameroon.
INTERPOL’s report all but confirms this, noting a gold rush towards “gold mining hotspots”, mainly in the artisanal and small-scale gold mining sector (ASGM).“Information suggests that gold mining is largely controlled by criminal consortia composed of […] organized crime groups, corrupt officials in high-ranking positions, economic players, and non-state armed groups in conflict zones,” the report states.
“These various actors work to extract a maximum of value from illicit gold mining while avoiding the payment of any export taxes that would benefit national government revenues. “Most gold in the region is illegally produced, concealed from authorities and smuggled out of the countries.”
Fraud and corruption
Chekoua said over 90 per cent of artisanal and semi mechanized miners were illegal, operating without mining licenses. He added that semi mechanized mining companies extracting gold had no physical office or signpost for identification.
“Even controllers do not know who is in the field. We carried out a study in 2016 and out of 35 enterprises we identified, only four were registered at the level of the National Social Insurance Fund,” the FODER official said.
“There is fraud and corruption at various levels beginning from the acquisition of mining permits issued by the Ministry of Mines, Industries and Technological Development. Given that the fiscal system is declarative, enterprises have the latitude to declare their output which most often is lesser than actual production, hence only quantity declared is taxed.”
Chekoua alleged that control agents were sometimes lodged and fed by the enterprises they were supposed to be monitoring, thus making them susceptible to bribes.
“Some government controllers do not have work contracts thus they easily connive with gold diggers to conceal actual production. Only about 10 per cent of artisanal gold production passes through the normal channels. The rest is sold on the black market to gold merchants, most of whom are also illegal, thus evading the ad valorem tax (tax based on the value of the gold).”
Oumarou Wadjonre, Chief of Taxation for the East Region in Bertoua, said there was a lot of opacity in the mining sector. He was, however, unable to provide statistics on the magnitude of gold revenue lost, putting it down to “imperviousness” in the sector. He said information on the actual hectarage allocated to companies for mining claims was unavailable, making tax recovery difficult.
“Exploitation licenses are issued by the Ministry of Mines, on whom we rely for information on the number of companies authorized,” he said. “The main tax in this sector is the annual surface area tax of 25 per cent of the total area exploited.”
Without giving any figures, the small and medium sized enterprises taxation office in Bertoua that is charged with the tax recovery from mining companies, evaluates the revenue losses to hundreds of millions of CFA franc.
According to Jean Mballa Mballa, member of Tax Justice Network Africa and Executive Director of African Regional Centre for Indigenous and Community Development (CRADEC), the 2016 Mining Code initiated to close the loopholes of the 2001 Mining Code lacks the “text of application” (instrument that defines sanctions to defaulters of the mining code law) to execute its work, creating opportunities for illegality. “People working illegally do not declare what they are exporting,” he said. From a 2021 CRADEC study, the government is declaring official data from the customs services that Cameroon exported something like two tons of gold to Dubai (but) in the UN Tradcom, the statistics Dubai is declaring suggest imports from Cameroon of 100 tons of gold. You can imagine the gap.”
At Guerwane, a local gold mining village in Cameroon’s East region – where poverty is rife despite the rich gold endowment – Assoura Javiel, a young artisanal miner in his 20s, said he and his colleagues mine gold illegally to make a living. The presence of foreign miners from China, USA, and Burkina Faso amongst others makes their work difficult, he said, because they sometimes chased them away from the mining fields with the authorities watching.
Our team witnessed 24-ton trucks filled with what looked like gold ore extracted from the area. We were told the trucks belonged to a Chinese company, and were traversing between the exploitation sites where gold is drilled to where washing takes place.
Javiel said on average he produced 3-5 grams a day, earning about XAF 100,000 (about US$50). He said his biggest buyers were collectors (gold merchants) who had no fixed location. In Kambele III, one of these “collectors” whom we identified readily admitted he was operating illegally and declined to speak to the media.
Weakened by lack of policing authority, the National Mining Corporation (SONAMINE) created in December 2020 by the Cameroon government to ameliorate the situation is practically dead in the water. Its general manager, Serge Havre Boyogueno, said officers assigned to gold washing sites to assess the situation were constantly denied access by operators. Although he gave a figure of 440kg of gold produced in 2021, he was convinced this was understated.
“There are sites where washing operations take place late in the night,” he said, explaining why it was difficult to quantify the actual production. “Tax revenue losses are enormous for the State (but) I can’t take the risk to give figures,” he said.
A protocol agreement is being negotiated with the Ministry of Defense which will enable SONAMINE control agents to be accompanied to the field by security forces, Boyoguero said. This was in addition to joint field trips with the Directorate General of Taxation to ensure forceful recovery of taxes from exploiting companies. Operators who denied access to control teams would have their mining claims sealed.
This story was produced by NewsWatch Newspaper. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.