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The 2019–2020 Annual Report of the National Bank of Rwanda (NBR) contains some surprises. According to the report, Rwanda’s export receipts were US$ 1.2 billion versus the imports amounting to US$2.8 billion. In other words, Rwanda’s imports more than doubled its exports. Rwanda’s balance of payment deficit was US$1.5 billion.
Compared to the previous year, Rwanda’s exports plummeted steeply in 2019 – 2020. The traditional exports fell by 17.3 percent while the non-traditional exports plummeted by 56.4 percent.
Here is the biggest surprise in NBR’s report. Unlike other export items, gold performed exceedingly well. According to NBR, Rwanda’s gold exports increased by an extraordinary 754.6 percent. In the words of the central bank, Rwanda’s “total export volume decreased by 15.2 percent, while total export receipts increased by 15.1 percent to USD 1,294.85 million, following increased receipt from gold exports (+754.6 percent).”
This gold export performance raises suspicion because it is questionable whether Rwanda has a viable gold mining sector. This matter remains an ongoing concern at the United Nations Security Council. It is Rwanda’s own interest to clear the air, given its vision of becoming a financial hub, which requires transparency.
The question of where Rwanda gets the gold to export persists
Several questions arise. Where does Rwanda get gold for exporting? Exactly what amount of gold is exported, in what form, and to where? While the National Bank of Rwanda provides statistics for each mineral export, the Bank does not provide any data for gold. For example, export earnings for individual mineral products were as follows in 2019 compared to 2018:
- Cassiterite exports value in 2019 was US$36 million down from US$39 million in 2018, representing 26.8 percent drop.
- Coltan export receipts in 2019 were US$44 million down from US$71 million in 2018, representing 37.4 percent drop.
- Wolfram export receipts in 2019 were US$17 million down from US$21 million in 2018, representing 21 percent drop.
In the case of gold, NBR merely states that gold exports increased by a remarkable 754.6 percent in 2019–2020.
The United Nations Security Council already raised concerns about Rwanda’s gold exports
Rwanda was implicated by the United Nations Security Council’s Group of Experts for misreporting its gold exports in 2019. For example, the Group of Experts revealed the discrepancy in Rwanda’s gold exports to the United Arab Emirates (UAE). They indicated that while Rwanda declared gold exports of 2,163 kg to the United Arab Emirates, UAE reported imports of 12,539 kg from Rwanda in the first nine months of 2018.
Worse still, the UN Group of Experts identified Rwanda as a smuggling route for stealing minerals from the Democratic Republic of Congo (DRC). The UN Group of Experts indicated that gold smugglers from Bukavu in DRC use Kigali, Rwanda’s capital city, as their main smuggling route. The Canadian conflict minerals research group IMPACT has shown how gold is illegally exported from the Kivu regions of the DRC to the neighbouring states. According to IMPACT, gold smuggled to Rwanda is then sent to Dubai, where it enters international markets. IMPACT says that “Rwandan authorities are failing in their due diligence on gold entering from DRC into Rwanda.”
It is Rwanda’s self interest to transparently account for the source of gold exports
By regional/global standards, Rwanda’s mining sector is tiny and largely informal, comprised of small domestic entrepreneurs or cooperatives. Base metals such as cassiterite, coltan, and wolfram are primarily mined via labour-intense small scale methods. Rwanda, therefore, has no medium sized mining operations which are defined as cumulative investment of about US$250 million to US$750 million or large investment of more than US$750 million. This reality raises serious doubts about the source of Rwanda’s gold exports.
Rwanda, therefore, has to account for its gold exports. A due diligence exercise is in Rwanda’s own interest, given its ambition of becoming a financial hub of eastern and central Africa. Besides first-class infrastructure, communications and commercial systems, a financial hub must have a transparent and sound legal and regulatory regime backed by a stable political system. To achieve its goal of becoming a financial hub, Rwanda must quickly clean up its act.