Burkina Faso – Quarantines and Gold Prices Down 20%

Voices

14 April 2020

Countries:

Burkina Faso

Author: Shawn Blore, Artisanal Gold Supply Chain Expert, Artisanal Gold Council Visiting Expert and Associate

With Cathy Sturgeon, planetGOLD project director for Burkina Faso, Artisanal Gold Council; and Kevin Telmer, Executive Director of the Artisanal Gold Council

Faced with expert predictions that the COVID-19 epidemic in Burkina Faso could rival that of Italy or Spain, authorities in the West African nation have implemented sweeping lockdown and quarantine measures. The measures – along with the many international lockdowns now in place – have slowed or halted artisanal gold exploitation and significantly reduced the price artisanal miners receive for their gold.

The COVID-19 pandemic is only just beginning to hit sub-Saharan Africa. To date, no country has been worse hit than the West African nation of Burkina Faso which, as of April 10, had reported a total of 443 cases of COVID-19 infection and 24 deaths. Though undoubtedly low due to limited testing and under-reporting, these figures have health experts deeply concerned. A recent analysis in The Lancet suggested that Burkina Faso and Senegal could be on track for an “expansive epidemic” of the type experience by Italy or Spain. [1]

Lancet line graph covid-19 pandemic west africa — Curves show how the pandemic initially evolved in west African countries (continuous lines) compared with European countries (dashed lines) and other African countries (dotted lines) from the fifth case diagnosed in the country (B). Burkina Faso has the most cases and a steep curve. Source: The Lancet

Burkina Faso’s health care system is limited, fragile, and underfunded and therefore inadequately equipped to prevent and respond to the COVID-19 pandemic[2]. As the authors of The Lancet study note, “…countries in the region have fewer than five hospital beds…and fewer than two medical doctors per 10,000 people.” Italy and Spain have 35 hospital beds and 41 doctors per 10,000 people.

A rapid acceleration in the number of cases could quickly overwhelm an already meagre and vulnerable health system. Even before the pandemic struck, Burkina Faso was already struggling, with some 45% of its over 20 million people living on less than US$1.25 a day.

Faced with this reality, when the COVID-19 virus hit Burkina Faso authorities reacted quickly, closing air and land borders March 21, and introducing an extensive country-wide curfew to close: central public markets, churches and mosques, schools and universities. Even the yaars, the small markets providing everyday needs found in local neighbourhoods were shuttered. Inter-urban public transport was suspended and cities with at least one confirmed case of COVID-19 were put under quarantine, with no one allowed to enter or leave. As of the last reckoning, this list of cities under quarantine included Ouagadougou, Bobo-Dioulasso, Boromo, Houndé, Dédougou, Banfora, Manga and Zorgho.

But as the Burkina Faso government and other governments around the world took swift and justifiable action to prevent further spread of the novel coronavirus, these actions caused critical parts of the supply chain to slow down or seize – particularly parts involving transport, logistics and finance. Adding to this already dire situation are Burkina’s ongoing jihadist violence in the north[3], and food insecurity and drought in many parts of the country. COVID-19 is thus a crisis layered on top of a crisis, and there is great risk that the situation will get out of hand.[4]

While the world is focussed on fighting the COVID-19 pandemic, we can’t forget that in developing countries, millions of artisanal miners depend on gold for their sustenance and livelihood (AGC, 2008). As artisanal miners’ ability to sell their gold for cash has deteriorated or ceased due to COVID-19 induced supply chain ruptures, the growing concern is that miners will be unable to afford basic commodities including food.

How will COVID-19 affect Burkina’s ASGM communities?

In Burkina Faso, artisanal and small-scale gold mining is the primary source of income for a large part of the country’s population, with over 430,000 people directly employed at more than 440 mine sites[5]. Given that many miners work informally, the true number is certainly higher. The vast majority of those involved in the artisanal gold sector lack formal education and have few alternative employment options. Many studies place female participation in artisanal gold mining in Burkina Faso between 40 and 50%[6] meaning that there is an important gender and family component to Burkina’s artisanal gold sector.

Panner in Burkina Faso artisanal gold mine — Gold Panner, Burkina Faso Ⓒ Artisanal Gold Council

The size and importance of Burkina’s artisanal gold sector means that any reduction of activity could well mean significant hardship. According to a 2019 baseline study undertaken by the Artisanal Gold Council, Burkina Faso’s artisanal diggers produce an estimated 50 tonnes of gold per year. Though largely undeclared, this gold brings in to the country some$2 Billion per year (AGC, 2019). Put another way, gold brings in $265 to every man, woman and child in Burkina Faso. Or it did, when the gold supply chain was still functioning.

Data collected over the past several days by the Artisanal Gold Council contacts and field teams shows that the Burkina Faso supply chain has contracted and in some places it has collapsed. According to a 2017 census, more than half of Burkina Faso’s gold sites are concentrated into four regions. These include the Central North regions (110 sites), the South West regions (61 sites), the North regions (61 sites) and the East regions (51 sites)[7].

AGC data shows that in one site in the South West, a hard rock site near the town of Dano, artisanal exploitation has ceased entirely, a casualty of the government quarantine of the town itself. In three other sites spread across the South West – Diébougou, Tonkalamine and Bantara – artisanal gold mining continues at half capacity or less, a result of crashing artisanal gold prices. According to AGC field researchers, the pit-side price paid for gold has dropped over 20%, from about 73% of world price pre-virus to just 58% of world price now.

The situation is similar in other parts of the country, with supply chains seriously disrupted by COVID-19, and miners either working at half capacity and else stockpiling their ore until they can sell it again at a reasonable price. Many report needing to sell at any price in order to be able to feed themselves and their families.

As COVID-19 causes the supply chains to shut down, and the power shifts from a seller’s market to a buyer’s, artisanal miners are already finding themselves at the mercy of predatory and fraudulent buyers looking to take advantage of miners by paying low prices.

Some formal buyers that still have capital are also buying at low prices and accumulating gold until the end of the quarantine to sell high to the international market. Reuters recently reported on miners losing out as coronavirus crushes local gold prices. It reported on a gold trader in Burkina Faso’s capital Ouagadougou, who asked not to be named who said that “Anyone who has cash can build up their stocks.” [8]

Artisanal miners rarely have that luxury.

Solutions – How can we mitigate impacts of COVID-19 on ASGM communities?

Buy artisanal gold!

Keep gold supply chains operating or re-activate them to ensure financial support of artisanal gold mining communities is maximized during the COVID-19 crises. Despite the strength of the international gold price, artisanal gold miners have seen drastic drops to their income overnight due to disruptions in local-regional-global gold supply chain. Buying their gold at a fair price is a highly effective way to keep vital income flowing to remote rural communities. Permitting and incentivising formal gold supply chain actors to operate, in line with national public health policies, can greatly help avoid income disruptions to vulnerable artisanal mining communities.

ASGM miners in Burkina Faso — Gold Miners, Burkina Faso Ⓒ Artisanal Gold Council

Governments from both producing countries and buying markets should consider the benefits of classifying the gold supply chain an essential service, as it is now in Colombia, so long as its operation is in line with national and regional public health policies. Governments should provide clear guidelines and protocols for supply chain operations to continue in alignment with national and global COVID-19 containment and control efforts.

Artisanal gold is an excellent mechanism to transfer wealth from rich developed centres into poor remote communities. Providing capital to improve lubricate supply chains and retain gold’s liquidity in mining dependent communities is one solution the AGC is working on – coming soon to this blog. Buying artisanal gold at pre-COVID-19 margins, perhaps minus new expenses if they have risen, can be a big part of the solution.

The Artisanal Gold Council has begun an artisanal gold Supply Chain Reactivation Project with the aim of restoring liquidity to gold buying in rural artisanal mining communities, and thus helping these communities mitigate the impacts of COVID-19. We believe that there is no better mechanism to get needed money into these remote rural communities. We will aim to motivate supply chain actors, authorities, and other stakeholders to collaborate rapidly to restore and keep supply chains and cash flow to rural gold mining communities operating. This will both avoid a potential crisis in those communities themselves but also contribute to maintaining a functional rural infrastructure and network that could even potentially be used to deliver COVID-19 assistance.

The AGC in Burkina Faso: planetGOLD and Minamata National Action Plan

The AGC has been present in Burkina Faso since 2011, and recently assisted the country in developing a national action plan for ASGM. The AGC is also a proud participant in the Global Environment Facility-funded planetGOLD programme in Burkina Faso. PlanetGOLD is an innovative programme that aims to improve the lives of artisanal and small-scale gold miners by focussing on four core areas: technical solutions, access to finance, formalisation, and knowledge creation/awareness raising. Here is what planetGOLD is doing already about COVID-19.

This article was originally published on April 10 on the Artisanal Gold Council website