Burkina Faso: Quantifying illicit financial flows in mining

Burkina Faso’s mining sector plays a central role in the country’s economy. In 2023, it accounted for 14.8% of GDP, over 75% of exports and more than 20% of government revenue. While industrial mining contributes significantly to public finances, artisanal and small-scale mining (ASM) remains largely informal and poorly regulated, despite producing an estimated 15 to 30 tonnes of gold annually, according to sources cited in a recent study by EITI Burkina Faso. This informality has made the sector particularly vulnerable to illicit financial flows (IFFs), especially in regions affected by insecurity and the presence of armed groups.

Illicit activity in the gold trade is well documented. According to Burkina Faso’s EITI disclosures covering the 2022 fiscal year, authorities recorded 39 cases of fraud related to gold trade. Anti-fraud operations by the national authorities also led to the seizure of counterfeit gold bars valued at over USD 15 million, underscoring the scale of criminal activity linked to the sector. Furthermore, a 2023 study  by the anti-fraud agency Brigade nationale anti-fraude de l'or (BNAF) revealed the significant impact of corruption and fraud on the gold sector, exacerbated by inadequate control mechanisms.

Concerns about the role of mining revenues in fuelling criminal networks and violent extremism have grown in recent years. The government has identified the extractive sector as a potential source of terrorist financing and placed combating IFFs high on the national agenda. To assess the scale of the problem, Burkina Faso EITI (ITIE-BF), with support from UN Trade and Development (UNCTAD), undertook a comprehensive study to estimate the volume of fiscal and commercial IFFs from the trade of gold, zinc, silver, manganese and dolomite between 2012 and 2021.

Billions of dollars lost to illicit activity

The study by ITIE Burkina Faso estimates USD 4.93 billion (FCFA 2.77 trillion) in illicit financial flows of five key minerals between 2012 and 2021. Gold alone accounted for 61% of this amount, with annual IFFs ranging from USD 147 million in 2016 to USD 620 million in 2017. The study used trade misinvoicing analysis, comparing national export data with UN Comtrade import data from trading partners. This revealed systematic discrepancies, particularly in gold and zinc trade, indicating underreporting of export values, as well as smuggling and mispricing. As part of its methodology, the study included a fact-finding mission to the United Arab Emirates (UAE) to validate the findings and address data gaps. The mission confirmed that the UAE is a key destination for gold of fraudulent origin, underscoring the transnational dimension of these flows.

Key findings

• Gold and zinc: These were the most affected commodities. Gold accounted for USD 3.01 billion in IFFs over the period (61% of the total), while cumulative figures from zinc exports were estimated at around USD 1.57 billion (32%).
• Other minerals: Silver, manganese and dolomite also showed notable undeclared flows, though lower in absolute terms. These discrepancies point to significant evasion and poor oversight.
• Artisanal and industrial mining: Artisanal gold production, largely outside formal regulatory frameworks, emerged as a major contributor to IFFs. Industrial mining was also implicated, through practices such as false declarations and the use of complex, opaque ownership structures to avoid taxation.
• Illicit practices: These included undeclared exports, misinvoicing, use of clandestine gold trading posts, and involvement of shell companies or unidentified actors in the trade.
• Areas of vulnerability: The study identified key weaknesses that facilitate IFFs, including the opacity of the mineral supply chain, weak traceability of production, gaps in customs controls and limited coordination between relevant authorities.
• Lost development potential: The USD 4.93 billion in estimated value of illicit financial flows over the decade could have financed the construction of approximately 15,867 health centres or 88,589 schools across Burkina Faso.

To address the identified vulnerabilities, the study recommends a combination of institutional, regulatory and technological reforms aimed at reducing revenue losses, improving governance and strengthening institutional capacity. These include:

• Formalising small-scale mining through the establishment of mechanisms for allocating dedicated mining zones and enhancing regulatory oversight.
• Digitising mineral title management and tax collection to reduce fraud and improve transparency.
• Establishing an independent oversight body to coordinate efforts across agencies and combat fraud.
• Strengthening data sharing among state agencies such as customs, tax, mining and security authorities.
• Including in EITI reporting an analysis of types of fraud and promoting systematic disclosure and accountability.

These recommendations form part of a broader work plan proposed in the study to combat illicit financial flows in the extractive sector. EITI implementation in Burkina Faso can play a critical role in supporting this agenda by promoting transparency in mineral trading, strengthening multi-stakeholder dialogue and using EITI data to inform policy reforms that close governance gaps. According to Burkina Faso’s 2023 EITI Report, a five-year action plan is being implemented to better track the costs and key actors of mining projects.

This data use case is drawn from a study commissioned by ITIE-BF with support from UNCTAD and the Burkina Faso National Institute of Statistics and Demography, and drawing on data from the UN Comtrade database.