Gold is one of the most valuable resources on Earth, with a kilogram regularly fetching more than US$55,000. In 2020, Mali produced an estimated 71.2 tonnes of gold.
But Mali only saw $850 million in gold in 2020, while that amount is worth billions, not to mention that the country produced a much higher than reported 71.2 tons.
The situation is not unique: several other gold-rich countries in Africa,
Including Mauritania, Senegal, Guinea, Cote d'Ivoire, Ghana, Burkina Faso, and Niger, are also not seeing the revenue they should, given the price of gold.
It has individual, corporate and national greed behind it, and a corrupt system that perpetuates itself. Although Mali has abundant gold, the country lacks the infrastructure to mine and export it.
The government therefore allows multinational corporations to apply for gold mining licenses in return for taxes paid to the Malian government.
These taxes should, in theory,
finance development, such as building infrastructure for a gold mine, improve the economy, and provide citizens with public goods such as health care and education.
Tax money alone is not enough to do these things, of course: a government also has to invest in the well-being of its people, and government corruption can stifle progress.
But without adequate funding, even the best-intentioned government has no chance of improving conditions for its citizens.
Foreign corporations take advantage of Mali's need for tax revenue to get the government to sign highly unfavorable but perfectly legal agreements
For example, one such agreement stipulated that no corporate tax would be due for the first five years, costing Mali billions in tax revenue.
Meanwhile, mining licenses sometimes allow these corporations to take gold samples out of the country without registering or paying taxes on them.
It must be small amounts of gold that are used for quality testing,
but the license does not limit the size of the samples, so it creates a loophole where corporations export large amounts of gold without paying any tax. are Multinational corporations are also avoiding taxes that they are legally required to pay.
They filter profits through a maze of tax havens that are difficult to trace. Or they exaggerate their expenses so that they owe too little tax.
For example, a corporation in Mali uses a subsidiary in Ireland to manage its operations and another subsidiary in the Netherlands to license its brand name.
In Mali, the corporation pays management fees to the Irish subsidiary and intellectual property license fees to the Dutch company, all for huge sums of money.
These expenses are deducted from the gross profit,
leaving the amount subject to minimum tax. These companies also buy gold in the black market., small-scale miners often operate without a license, so the government is unaware of how many gold miners there are.
Corporations buy gold from these miners, avoid the cost of mining the gold themselves, and pay miners well below market value.
Then they turn around and tell the government that they spent a lot of money mining gold, which they didn't do at all. Mali's revenue authority has no way to verify this information, causing the country to lose more tax money.
Similarly, corporations pay corrupt government officials to help smuggle gold across borders, primarily to the UAE, rather than through legal means.
In 2016, Mali exported about $200 million worth of gold,
but the United Arab Emirates reported receiving more than $1.5 billion in imported gold from Mali that same year.
The gold is then sold from the UAE to European, American and Asian markets, with no question of its origin. Similar patterns can be seen with gold-rich countries across Africa, indicating that gold is being smuggled on a large scale, untaxed.
All of this creates a vicious cycle, forcing continued dependence on the corporations that helped create the situation in the first place.
More than half of Mali's citizens live below the international poverty line, while their nation's wealth is in the pockets of foreign corporations and corrupt officials.
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