Courtesy of The Africa Report, a look at the impact that Sudan’s current conflict is having upon its legal – and illegal – gold industry:

In 2022, Sudan’s gold exports reached almost $2.5bn, equivalent to about 42tn sold. This was good for almost 45% of national exports before the tables turned the following year in response to the war. Between the gold rush and disillusionment, we delve into the accounting.

With gold deposits in the northeast, central and Darfur regions, Sudan is the third largest African country – after South Africa and Ghana – in terms of known gold resources on the continent.

While the country has erupted into conflict, gold is becoming increasingly important, currently financing General Abdel Fattah al-Burhan and rival General Mohamed Hamdan Dagalo (Hemeti)’s armies.

Gold also provides a living for millions of locals, such as miners’ families, transporters, traders, among others.

Uncontrolled rush
Every year, more than 100tn of gold is traded in Sudan. However, most of the deposits remain unexploited due to a lack of resources and infrastructure. Extraction is mainly carried out in an artisanal manner, as seen by the ransacking of the Jabal Maragha archaeological site, north of the capital.

The market’s liberalisation in 2020 also exacerbated this uncontrolled gold fever.

According to official figures, there were about 1.5 million gold miners in Sudan as of 2022. In reality, there are at least four million Sudanese currently engaged in this activity in the Nubian desert.

Almost half of the gold mined leaves the country illegally, be it via Khartoum’s airport, Port Sudan, or the land border with the Central African Republic.

Once out of the country, the yellow metal is rerouted to Dubai or exported to Moscow via the Wagner Group.

$120m in lost revenue
The illegal transfer of domestically mined gold makes it difficult for the government to control and levy taxes on gold mining activities.

While the Sudanese government could presumably levy a 3% tax on the value of the gold extracted, as is the case in some African countries, according to our calculations, estimated revenue losses range around $120m per year.

This amount represents about 0.9% of the Sudanese government’s average annual budget. According to IMF data, in the 2021-2022 fiscal year, the annual budget is estimated to be around $14.2bn.

It will be the poorest, however, who will feel the most real impact. According to figures from the UNDP, 15 million Sudanese are at risk of starvation, a figure likely to rise as the country becomes a war zone.

Fragile economic landscape
The economic situation in Sudan has been marked in recent years by very high inflation, reaching a peak of 389% last March. With successive US sanctions, the Sudanese pound has lost more than 90% of its value against the US dollar.

Though the Sudanese authorities have tried to stabilise their currency by raising interest rates and limiting the number of notes and coins in circulation, these measures have had limited effects on the real economy.

With the conflict, Sudan, already weakened by a debt of $56bn, will have even more difficulty in recovering, especially since remedies to international financing are no longer possible following the decision of the World Bank, the IMF, and the African Development Bank (AfDB) to suspend their aid to the country following human rights violations.