Smuggling hits Malawi’s gold trade
Malawi’s gold is being smuggled to Mozambique and other neighbouring countries, bypassing a structured market which the Reserve Bank of Malawi (RBM) established two years ago.
The key influence is that the gold is fetching higher prices on the alternative market outside the country as compared to what RBM offers.
In 2021, the central bank started buying gold from small-scale and industrial mining ventures as part of its initiatives to provide “a well-structured market for the minerals and metals, beginning with gold.”
In October 2022, the central bank announced it had amassed up to 200kg of gold since it started the purchases.
But, perhaps, the amounts could have been far higher than the 200kg as we have established that some traders are smuggling the gold out of the country and selling it in Mozambique and other markets where it fetches far higher prices than the ones RBM offers.
Last week, we visited gold trading hotspots in Nkhotakota, Kasungu, Machinga, Dedza, Mangochi and Blantyre.
We established that gold sellers prefer to take their gold to neighbouring markets.
Gold is trading at an average $65 (about K65,000) per gram on the international market but RBM has been offering K75,000 per gram.
But even at such a price, RBM is unable to attract all traders. This is because smugglers have pushed the price up to almost K95, 000 per gram on account of the volatile exchange rate of the dollar on the black market.
That parallel market is taking the resource away from the RBM market with most of the gold being smuggled into Mozambique via Dedza, Ntcheu and Mchinji borders.
Posing as a potential buyer, this reporter visited a number of hotspots including in Dedza where one of the traders, Chrissy, said artisanal gold ‘merchants’ like her do not necessarily find it comfortable to take the gold to Mozambique themselves because of the complications of smuggling.
“But we have no choice because the price is better there. We travel through Dedza or Bilila. We get into a taxi which takes us to the gold buyers. We get around K90, 000 per gram,” she said.
Gold sellers in Nkhotakota, Kasungu, Lilongwe and Liwonde told Malawi News that powdered gold fetches between K65, 000 to K75, 000 per gram on the local market but it earns more when taken to Mozambique, Zambia and Tanzania.
One of the sellers claimed that some foreigners, politicians, police and other government officials are involved in the business.
RBM spokesperson Ralph Tseka admitted that the local market is indeed being prized out through smuggling.
He said the central bank failed to buy gold in the last financial year because of stiff competition caused by prices set by smugglers.
“We have a lot of challenges when it comes to buying gold. More gold is being smuggled outside the country.
“The challenge is that our boarders are porous. We have tried to engage security agencies — the army and police — to help to stop the smugglers but this has not helped in anyway,” Tseka said.
He said since they started buying gold in May 2021, they have so far accumulated about 200kgs.
“We have been facing different challenges ranging from competing with smugglers, low quality of gold, low volumes being produced by artisanal miners and accessibility of some places,” Tseka said.
He said RBM has brought along a number of interventions, among which is empowering of small scale miners through buying equipment for them so that they can increase their volumes.
“We have also engaged the Defence and Security Committee of Parliament who we have taken around the gold hotspots to appreciate security problems faced by small scale miners.
“It is our hope that this committee of Parliament will assist in resolving some of the problems faced by these artisanal miners,” he said.
Chairperson for Natural Resources Justice Network Kossam Munthali said it is common knowledge that Malawi’s minerals are smuggled out of the country.
What is surprising, he said, is that nothing is being done to stop it, even after President Lazarus Chakwera issued a call in 2021 for the security agencies to crackdown on the practice.
Scotland-based Malawian economist Velli Nyirongo said smuggling of Malawi’s precious minerals could be blamed on the police and immigration because they have been too slow to act.
He said protecting the minerals from smugglers is key to improvement of Malawi’s perennial forex woes.
“Had they taken a proactive approach, gold and other precious minerals could not have been smuggled out of the country and Malawi could not have been short of forex which manifests itself in shortages of fuel and medical supplies,” he said.
Minister of Homeland Security Ken Zikhale Ng’oma told Malawi News that he expects the police and immigration to rise to the challenge and bust the smuggling networks.
“I am urging all immigration and police officers manning the boarders to curb illegal gold market. It is their duty to flush out gold smugglers. If they are failing, then we have to put in officers who are willing to work for the benefit of Malawians,” said Ng’oma
Principal Secretary for Mining, Joseph Mkandawire, said he was in the field and would only respond later.
Last week, Parliament passed the Mines and Minerals Bill, which seeks to repeal the Mines and Minerals Act of 2019.
The new act will incorporate provisions for the establishment of an independent mining and mineral resources regulatory authority.