Tackling Illicit Financial Flows in Burkina Faso’s Mining Sector: Challenges and Pathways to Sustainable Development

Burkina Faso‘s mining sector, often seen as a boon to the national economy, is in reality facing colossal challenges related to the management and transparency of its revenues. Illicit financial flows (IFFs), associated with mining, pose a major problem that has caused significant economic losses in Burkina Faso.

According to a report co-signed by Burkinabe civil society and reported by the Burkina Information Agency on August 7, 2024, fraudulent operations in the purchase and sale of minerals have caused the country to lose more than 2,700 billion CFA francs between 2012 and 2021. This figure, alarming in its magnitude, highlights the challenges facing Burkina Faso in ensuring transparency and justice in the exploitation of its natural resources.

Illicit financial flows (IFFs) represent funds that escape state control through illegal transactions, under-reporting, or false invoicing in export sectors such as mining. The report of the Extractive Industries Transparency Initiative (EITI-Burkina), submitted to the Minister of Economy, Aboubakar Nacanabo, estimates that over the period from 2012 to 2021, the value of IFFs linked to the exploitation of gold, zinc, silver and manganese amounts to approximately 2,774.59 billion CFA francs.

This sum far exceeds the official revenues collected by the State in the mining sector over the same period, revealing a significant gap between potential revenues and actual revenues collected by the public treasury.

The post-insurrection period, from 2014 to 2021, saw an explosion of these flows, with a cumulative value of USD 3,686.75 million, or approximately 2,212.05 billion CFA francs. This observation highlights not only the ineffectiveness of the control mechanisms in place, but also the impact of political and social instabilities on the management of natural resources.

The consequences of illicit financial flows

IFFs have devastating consequences for the national economy. By depriving the State of significant financial resources, they limit investment capacity in crucial sectors such as health, education, and infrastructure. The revenue lost from these illicit flows could be used to finance community development projects, reduce poverty, and improve the well-being of populations.

Moreover, these illicit flows indirectly contribute to fueling terrorism and armed conflicts. The embezzled funds are often reinvested in illegal activities, including the financing of armed groups. Indeed, Minister Aboubakar Nacanabo stressed the importance of combating these flows, not only to protect the economy, but also to dry up the sources of financing for terrorism that continues to destabilize the region.

The new mining code in Burkina, a legislative response

Faced with this situation, Burkina Faso adopted a new mining code on July 18th, 2024, the main objective of which is to strengthen the legal framework governing the mining sector and prevent fraudulent practices. This code introduces strict provisions aimed at suppressing offenses related to IFFs in the mining sector.

To this end, several measures have been taken. Thus, Article 220 provides for penalties for any person involved in the falsification or fraudulent modification of mining titles, the provision of inaccurate information to obtain a mining title, or the illegal modification of the allocated perimeters. The penalties provided for range from five to ten years of imprisonment, accompanied by a fine ranging from ten million to fifty million CFA francs.

According to Article 223, the mineral substances extracted illegally will be confiscated for the benefit of the State. In addition, the working instruments and means of transport used in these illegal activities will also be seized.

Article 276 severely punishes beneficiaries of financial flows from illicit trafficking of gold or other precious substances. Penalties range from one to five years of imprisonment, in addition to a fine equivalent to double the value of the substances involved in the trafficking.

As for Articles 280 and 283: Offences related to the marketing of gold and other mineral substances will now be reported by a wide range of authorised agents, including judicial police officers, customs officers, and sworn agents of various administrations. Searches and seizures can be carried out at any time, thus ensuring more effective repression of illegal activities.

To ensure that investigations into illicit flows are not hindered, Article 289 provides that only medical confidentiality and defence secrecy may be invoked against members of the anti-fraud coordination body. In addition, these officers are entitled to carry handguns in the exercise of their duties, and may use their weapons for warning shots in specific situations. This provision aims to protect officers while ensuring their effectiveness in the fight against mining fraud.

Also, Article 303 provides for a distribution of revenues generated by the sale of confiscated mineral substances, with a 75% share allocated to the Public Treasury. This provision strengthens the State’s involvement in the fight against the FFI by ensuring that the profits from repressive actions are largely reinvested in the national budget.

The importance of transparency and accountability

Burkina Faso’s new mining code reflects a clear desire to strengthen transparency and accountability in the mining sector. However, the effectiveness of this legislative framework will depend heavily on its rigorous implementation and the ability of authorities to enforce its provisions. Strict enforcement of these laws, combined with increased cooperation between the various control institutions, is essential to reduce illicit financial flows.

The involvement of civil society, as demonstrated in the EITI-Burkina report, is also crucial. Transparency in the mining sector cannot be achieved without the active participation of citizens and civil society organizations, which play a monitoring and awareness-raising role.

Prospects for better management of natural resources

Burkina Faso is at a crossroads in the management of its natural resources. The losses suffered over the last decade show that it is imperative to adopt strong measures to protect the national economy against fraudulent practices.

The new mining code, while ambitious, is only one step towards reducing illicit financial flows. It will need to be complemented by other initiatives, including capacity building of control institutions, international cooperation to track illicit funds, and continued engagement of civil society.

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(Featured image by Dion Beetson via Unsplash)

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First published in le faso.net. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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