Unmasking the Exploitation

Gold, a highly prized resource, holds immense value on Earth, with a kilogram often exceeding $55,000 in worth. In 2020, Mali, a country abundant in gold, produced an estimated 71.2 tons of this precious metal. However, Mali's share of revenue from gold in 2020 amounted to only $850 million, a mere fraction of its actual worth in billions. Moreover, it is likely that the reported gold production of 71.2 tons understates the true output. Unfortunately, Mali is not alone in this predicament, as several other gold-rich nations in Africa, including Mauritania, Senegal, Guinea, Cote d'Ivoire, Ghana, Burkina Faso, and Niger, also suffer from inadequate income despite the high price of gold.

The underlying cause of this injustice stems from greed, both on an individual and national level, perpetuated by a corrupt system. While Mali possesses substantial gold reserves, the country lacks the necessary infrastructure for efficient mining and exportation. Consequently, the government permits multinational corporations to obtain licenses for gold mining in exchange for taxes paid to the Malian government. Theoretically, these taxes should fund essential development projects, such as mining infrastructure, economic improvements, healthcare, and education for citizens. However, tax revenue alone falls short of achieving these goals, as it requires a government genuinely invested in the well-being of its people. Government corruption further obstructs progress. Without adequate funds, even the most well-intentioned government stands little chance of improving the citizens' circumstances.

Foreign corporations exploit Mali's reliance on tax revenue by enticing the government to sign unfavorable yet legally binding contracts. For instance, some contracts stipulate that no corporate taxes will be owed for the initial five years, resulting in millions of dollars in lost tax revenue for Mali. Additionally, mining licenses often enable corporations to extract gold samples from the country without registering them or paying taxes, exploiting a loophole where large quantities of gold are exported tax-free.

These multinational corporations also engage in tax evasion, sidestepping their legal obligations. They funnel profits through intricate networks of tax havens that are challenging to trace. Moreover, they inflate their expenses, minimizing their tax liabilities. For example, a corporation operating in Mali may utilize subsidiaries in Ireland and the Netherlands. The Malian corporation pays exorbitant management and intellectual property license fees to these subsidiaries, which are deducted from overall profits, significantly reducing the taxable amount. Furthermore, corporations take advantage of the black market for gold. They purchase gold from unlicensed small-scale miners at below-market prices, avoiding the expenses associated with mining it themselves. They then claim inflated mining costs to the government, further depleting tax revenues. Collaborating with corrupt government officials, these companies also engage in smuggling gold across borders, primarily to the United Arab Emirates, bypassing legal channels. Mali reported exporting around $200 million worth of gold in 2016, while the UAE reported receiving over $1.5 billion of imported gold from Mali during the same period. The gold is subsequently sold in European, American, and Asian markets without scrutiny regarding its origin, perpetuating tax evasion on a massive scale.

This vicious cycle perpetuates a continued reliance on the corporations responsible for the initial exploitation. Meanwhile, over half of Mali's population lives below the international poverty line, while foreign corporations and corrupt officials line their pockets with the nation's wealth.

The plight of gold-rich countries across Africa reflects a disheartening reality, highlighting the urgent need for systemic changes to address exploitation, corruption, and illicit practices.

Henrik Leandro