How Sahel Countries Could Benefit from Their Gold

The Starting Point

Sahel countries produce significant quantities of gold. Much of the economic benefit stays local—circulating through communities near mining sites. What's missing is the infrastructure to capture value at the national level: reserves, low-cost financing, coordinated reinvestment.

Between 2020 and 2024, Mali, Burkina Faso, Niger, and Chad produced an estimated 850–1,050 tons of gold—worth $70–85 billion at current prices. The wide range reflects uncertainty in artisanal production, much of which goes unrecorded.

Artisanal mining is widespread and deeply rooted in local economies. Rather than working against this reality, effective policy works with it—creating conditions where formal participation becomes the path of least resistance for miners. The question is whether there's a policy sequence that could redirect the flow—keeping gold within national economies and converting it into development capital.

The answer appears to be yes, but it requires treating gold policy as a pipeline rather than a single intervention. Each step enables the next.

But before walking through the pipeline, it's worth understanding what artisanal mining contributes—both to local economies and to the broader mining investment cycle.

The Economic Case for Artisanal Mining

Where the Value Stays

The fundamental difference between industrial and artisanal gold mining is where the money goes.

In the LBMA value chain, 60-70% of final value stays with artisanal miners. They spend nearly all of it locally: food, housing, transport, services. The cash circulates within communities.

Industrial operators repatriate 60-80% of revenues to foreign shareholders and suppliers. The extraction happens locally. The wealth accumulation happens elsewhere.

Bazillier and Girard's 2020 study of Burkina Faso's gold boom found that opening an artisanal mine increases household consumption by 15% within a 10km radius. Industrial mines showed no statistically significant effect on local consumption.

Artisanal mining distributes income across many small operators who spend locally. Industrial mining concentrates income in a single firm that spends globally.

Complementarity, Not Opposition

Artisanal and industrial mining serve different functions in the investment cycle. Artisanal activity is, in effect, distributed geological exploration. When artisanal miners concentrate in an area, they signal ore presence—de-risking the geology for larger operators. Industrial companies often follow artisanal activity rather than precede it.

This creates complementarity. Artisanal mining generates immediate local value and geological proof of concept. Industrial mining, if it follows, generates fiscal revenue and larger-scale extraction.

The transition mechanism remains unresolved. How a site moves from artisanal to industrial without displacing the communities that de-risked it—compensation structures, local equity stakes, employment provisions—requires further work.

The Multiplier Effect

World Bank and IGF analyses estimate a dependency ratio of 1:6—for every artisanal miner, six additional people depend directly on that income. This includes not just family members but the entire local value chain: food vendors, equipment suppliers, mechanics, transporters, lodging providers, retailers.

In logistics hubs like Abéché, mining wages drive demand for food, water, and equipment. Markets exist because miners exist.

There's also seasonal complementarity. In the Sahel, artisanal mining functions as a counter-seasonal activity. Gold income allows farmers to purchase inputs and survive the dry season, reducing pressure for urban migration.

Regional Evidence

The pattern holds across the region:

Burkina Faso: Despite security challenges, artisanal mining is more effective at reducing immediate rural poverty than industrial mining. Wealth distribution is broader and less enclave-like.

Ghana: Artisanal mine presence increases real per capita income by 2% nationally, primarily through non-agricultural income stimulation. The sector diversifies rural economies beyond subsistence agriculture.

Tanzania: In Geita region, communities with artisanal mining show statistically lower rates of extreme poverty than purely agricultural communities. The sector acts as a buffer against drought and crop failure.

Production Scale

Estimated gold production for AES countries plus Chad (2020–2024):

Data quality is poor. The IMF flagged $3 billion in unrecorded gold exports from Chad in 2023 alone. Official figures likely understate actual flows.

Current Efforts

Formalization is already underway. Chad established SONEMIC (Société Nationale d'Exploitation Minière et de Contrôle) to coordinate the mining sector. Burkina Faso created ANEEMAS (Agence Nationale d'Encadrement des Exploitations Minières Artisanales et Semi-mécanisées), which has trained over 27,000 artisanal miners and is building the country's first national gold refinery. Mali launched West Africa's first state-owned refinery in 2025, with capacity for 200 tons per year.

Regional coordination is emerging through SEMICA, which convenes annual mining sector conferences in Ouagadougou, and through the Alliance des États du Sahel (AES), whose economic integration agenda includes mining policy harmonization. These efforts are early-stage but provide institutional foundations for the policy pipeline described below.

The Policy Pipeline

Step 1: Formalize Artisanal Mining

Formalization means removing barriers that make legal participation unattractive. When selling gold formally costs more than selling it informally—through taxes, fees, or bureaucratic friction—miners choose informal channels.

Tax-free or low-tax status for artisanal production changes the calculation. The goal isn't maximum extraction of fiscal revenue from each transaction. It's bringing the sector into visibility where downstream value capture becomes possible.

Formalization also enables data collection. Understanding production volumes, locations, and flows is prerequisite to any further policy.

Step 2: Establish Purchasing Mechanisms

Formalization creates the possibility of domestic sale. Purchasing mechanisms create the infrastructure.

The model: government-backed or licensed purchasing points that offer competitive prices—close enough to international rates that smuggling isn't worth the risk. If the domestic buyer pays 90-95% of London spot, most miners will sell domestically.

This retains resources nationally, disrupts smuggling economics, and creates a channel for reserve accumulation.

Step 3: Build Gold Reserves

With purchasing infrastructure in place, governments can systematically accumulate reserves. This serves three functions:

Currency backing. Reserves provide a tangible asset base for local currencies—credibility that pure fiat currencies lack.

Monetary policy space. Countries with gold holdings have more room to maneuver than those entirely dependent on foreign exchange.

Strategic positioning. Central banks globally have been net gold buyers for over a decade. Building reserves now positions Sahel countries for multiple possible monetary futures.

Step 4a: Access Low-Cost Financing

This is where reserves convert to development capital.

Traditional financing for Sahel countries is expensive. Multilateral loans carry high interest rates reflecting perceived country risk. Gold-backed borrowing offers an alternative: when loans are collateralized by physical gold, the lender's risk shifts from sovereign risk to gold price risk. Result: significantly lower interest rates.

A 5 percentage point reduction on a $500 million loan is $25 million per year in avoided interest—money available for development rather than debt service.

Step 4b: Regional Collaboration

The logic above applies more strongly at regional scale. The Alliance des États du Sahel (AES) provides a coordination mechanism.

A shared reserve system pools resources across countries. Unified pricing reduces arbitrage that smugglers exploit. Regional coordination increases bargaining power in international negotiations.

Step 5: Development Investment

The endpoint is low-cost capital for development: agriculture, infrastructure, manufacturing. These are sectors where patient capital makes projects viable that wouldn't be at market rates.

A structural consideration: large-scale industrial approaches may not fit Sahel contexts. Limited infrastructure and dispersed populations favor decentralized models. Gold revenue reinvested in context-appropriate development creates a different growth path than traditional resource extraction.

Implementation Sequence

The small wins above can be sequenced over 24-36 months:

Each phase generates data and credibility for the next. Failure at any stage is contained—pilot programs can be adjusted without national-scale consequences.

Addressing Objections

Policy shifts create resistance. Anticipated objections and responses:

The Core Proposition

Sahel countries have a resource that currently generates limited sovereign benefit. A policy sequence exists that could change this—formalization, centralized purchasing, reserve accumulation, low-cost financing, development investment.

Each step is individually rational. The sequence is mutually reinforcing. The obstacles are real but addressable through phased implementation.

The approach aligns with the African Mining Vision: valuing mineral resources not only for what they export, but for the communities they sustain.

Industrial mining generates fiscal revenue. Artisanal mining generates stability. A policy framework that captures both—rather than prioritizing one at the expense of the other—extracts maximum value from the resource base.

The technical pathway exists. Implementation requires political will, institutional capacity, and regional coordination. Starting small—with pilots, working groups, and feasibility studies—builds the evidence base and credibility for larger moves.

A formalized artisanal miner is a citizen with a job. A functioning purchasing mechanism is a channel for reserve accumulation. A reserve is collateral for cheap financing. Cheap financing is development capital.

The pipeline works. The question is whether to build it.