Kenya has become a conduit for illicit gold from South Sudan, a global think-tank says.
Although the levels are unknown owing to the secrecy and opaqueness of the illicit trade, there are widespread reports of rampant smuggling on the order of hundreds of millions of dollars.
In a study by the Geneva-based Global Initiative Against Transnational Organised Crime (GI-TOC), Kenya and Uganda emerged as key transit hubs for South Sudan’s illicit gold to China and the Middle East.
The study published in May 2023 was informed by field research in South Sudan, Uganda and Kenya between December 2021 and March 2022, involving over 80 interviews.
The report – Tarnished Hope: Crime and Corruption in South Sudan’s Gold Sector – quotes a South Sudan civil society advocate noting; “Gold that is smuggled into Kenya is ours; the gold being refined in Uganda is ours”.
Corruption and weak capacity at official border points, airports and land crossings, as well as at the country’s vast and porous borders, make policing the flow of gold from South Sudan very difficult.
Political elites and influential businesspeople are reported to be involved in gold smuggling, which is allegedly carried out with the full awareness of authorities.
Beyond South Sudan’s borders, the Kakuma refugee camp in Kenya and Arua in Uganda are important nodes of illicit gold flows from South Sudan.
The trade and export hubs of Kampala, Entebbe and Nairobi further downstream are also key points.
Most of these flows, as well as gold, smuggled directly out of Juba, are reportedly destined for the United Arab Emirates. The quantity of gold produced in Kenya remains uncertain – owing to the informal nature of the industry. Officially only 394.9 kilograms of gold were produced in 2019.
However, the country has been featured in reports detailing the smuggling of minerals from conflict regions, such as the Democratic Republic of Congo (DRC). The GI-TOC report probably is the first of its kind to detail in granular form the gold smuggling routes from Kapoeta, which is the key gold mining region in South Sudan, through the border into Kenya. Kapoeta produces about 20 kilos of gold daily, most of which ends up in Kenya and onwards to UAE.
There are three primary smuggling routes out of South Sudan - via Juba airport, via Kenya and via Uganda.
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Major destinations for South Sudanese gold are Nairobi, Kampala and Entebbe, and Dubai. Gold from Eastern Equatoria State (especially Kapoeta) goes to Kenya, while gold from other parts of the country is primarily smuggled to Uganda.
According to GI-TOC, gold is smuggled from Kapoeta to Kenya daily via the Nadapal border point. In Eastern Equatoria State, South Sudan, politicians and bureaucrats reportedly provide patronage and protection to smugglers, most of whom are foreign nationals. Traders moving gold in bulk will bribe law enforcement and revenue authorities at the border.
However, it is reported that bulk movement of gold is not common.
“It is considered more secure to travel with smaller quantities because the gold is easier to hide from highway bandits and law enforcement officers,” according to the report. Smaller amounts are taken across informal border crossings known as panya (Swahili for mouse) routes.
At the Nadapal checkpoint, there are no scanners and customs and immigration offices operate for only eight hours a day, leaving the station at the mercy of security officials, some of whom are reported to be involved in smuggling. Linked to the delay or non-payment of salaries, on the South Sudan side of the border, officials do not conduct visual screenings; instead, they are primarily concerned with collecting the ‘visa fee’.
Kenyan officials also conduct minimal checks at the border and do not screen people for gold smuggling. The lack of cooperation between Kenyan and South Sudanese border officials allows illicit cross-border flows to flourish. Once gold enters Kenya, the Nadapal–Lokichogio–Kakuma–Lodwar road is the key smuggling route. Most of the gold business is done in Kakuma town, Kakuma Refugee Camp, and Lodwar town.
Another route from Kapoeta runs through Uganda and the Oropoi border crossing before reaching the towns of Kakuma and Lodwar. This route has little traffic and police presence, making it an attractive route for smugglers and a hotspot for borderland crime.
Crossing into Kenya using this route is also less expensive because there is no customs or immigration checkpoint. Gold smugglers use bodabodas or hire Toyota Probox vehicles for travel from Oropoi to Kakuma
Because there is also gold mining in Turkana County, once this valued mineral from Kapoeta crosses the border, it is easily laundered into gold markets as that produced in Kenya, hiding its South Sudanese origins.
The town of Kakuma is the biggest trading centre in Turkana County, including for gold. According to a former gold centre employee, one of the main gold dealers in the camp sends gold to Nairobi daily. In Kakuma, gold is traded in hardware shops, general shops, fuel stations, hawalas (informal money transfer system) and forex bureaus.
In addition to South Sudan gold, the one produced in Turkana is also traded in Kakuma because this is now where all the big dealers are located.
A local journalist explained to GI-TOC researchers, thus, “A lot of gold is traded within the refugee camp because business is vibrant and the internet is awesome. Trading from here is very easy”.
The leading banks in East and Central Africa also have a presence, and there are dozens of forex bureaus and branches of three of the world’s leading hawalas. While production estimates are highly speculative, major dealers in Turkana could buy two to four kilogrammes of gold per day.
The confluence of the flows is not welcomed by Turkana gold miners or gold mining authorities because the low prices paid in South Sudan are reportedly dragging down the prices offered by gold traders to miners in Turkana.
In Lodwar, a group of about 12 people are reported to be involved in the illicit gold trade. Group members have come together and are establishing high-class entertainment clubs in the town. Summarising the challenge, a Turkana government official stated: ‘We know there’s a lot of illicit business in gold and influential people are involved. We know them, but we cannot talk about it because they are dangerous; they could kill us.”
“Senior police officers and top politicians are involved, and that’s why nobody wants to discuss this issue. Ask yourself, who should investigate and deal with this issue when the concerned people are the ones running it? We are helpless.” From Turkana, gold moves easily to the Nairobi market, especially Eastleigh, and then onwards to international markets.
Lokichogio Airport in Turkana was a preferred gold smuggling hub until it was closed for renovations. The gold trade in Eastleigh is clandestine, hidden behind front businesses such as general merchandise, and carried out in private offices.
Once Somali traders have sent gold to Eastleigh, it is either exported, sold to foreign nationals or turned into jewellery.
Gold is also used for barter trade at the refugee camp. The commodities exchanged with gold include beads (in very high demand in South Sudan), foodstuffs, salt, medicines, cookware, plastic jerricans, blankets, bedsheets, and fruit and vegetables.