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Study on the gold and diamond trading sectors in Cameroon

 

Duration: 12 months ( September 2020- September 2021)

Country of intervention: Cameroon

Donors: World Bank – PRECASEM (Projet de renforcement des capacités dans le Secteur Minier)

Implementors: CRADEC- Centre Régional Africain pour le Développement Endogène et Communautaire)

Context:

Artisanal and small-scale gold (gold panning) and diamond (diamond mining) mining generates significant employment opportunities in rural communities, providing a substantial source of income and thus an important means of livelihood for local people as well as access to services such as health and education. However, the income generated is often irregular, and the methods of exploitation and processing also cause negative social and environmental impacts. 

The study on the marketing of gold and diamonds in Cameroon was motivated by the observation that artisanal and semi-mechanised mining does not sufficiently benefit the local development of the population and does not contribute to state revenues. 

The mission consisted of identifying, characterising and analysing the actors, their interactions and practices, the challenges associated with this sector and the chains, from the point of extraction to the point of export, as well as the opportunities and steps to be taken that could facilitate the entry of this sector into the formal economy and thus favour its contribution to local and national development.

Objective:

Carry out a study on the commercialization channels for gold and diamonds in Cameroon and propose solutions to better integrate artisanal and semi-mechanised mining and its supply chains into the country’s formal economic.

Methodology:

The methodology included a review of most available secondary sources in French and English, interviews with some 50 stakeholders in Yaoundé and the East Region, and a quantitative survey, conducted by the Cameroonian NGO CRADEC, of 226 artisanal mining site managers in the East, Adamaoua and North Regions.

 

Main findings:

  • The artisanal and semi-mechanised gold and diamond mining and marketing sectors are structured but mostly informal.
  • Artisanal gold mining is of some socio-economic importance, with gold panning practised in 1,807 sites and directly employing 27,000 artisanal miners, thus constituting a means of subsistence for some 120,000 people.
  • Semi-mechanised gold mining is practised in the east of the country and employs few Cameroonian nationals; access to the resource is mainly through practices that circumvent the spirit of the law.
  • Negative impacts on the environment have increased over the last decade.
  • The macroeconomic impact of gold production is low (0.3% of 2019 GDP) but feeds a significant national economic circuit: 95% of the value created remains in Cameroon.
  • The state benefits from the indirect effects of consumption and trade related to this sector, via the value-added tax on products consumed and the injection of foreign currency.
  • Gold traders make their margins on the informal exchange rate between the dollar and the CFA franc, and diamond traders on the resale of Central African production which is smuggled into the country.
  • The legal and institutional framework is confused and disorganised, and does not encourage actors to work in the formal sector. The distribution of competences between the ministry and the delegations creates loopholes and duplication.
  • The attempt to build up a public stock of gold through public purchase from artisanal miners and the levying of the Synthetic Liberating Tax is a relative failure.
  • The taxation applied to the sector is the highest in the sub-region, which discourages entry into the economy and formal marketing channels and instead encourages smuggling.

 

Recommendations:

  1. Redefinition and updating of public policies on mineral sectors with an attractive tax system. 
  2. Improvement of the institutional framework.
  3. Development of a regional and concerted mining commercialization policy.
  4. Support for gold and diamond commercialization channels.
  5. Improving the terms of public purchase of gold to increase the national reserve.
  6. Support for artisanal mining.
  7. Sanitation and rationalising semi-mechanised mining.

 

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