Artisanal gold mining provides a critical source of livelihood to an estimated one million women and men across Burkina Faso, many of whom face significant poverty and insecurity.
Much of the sector operates informally—outside the purview of the central government—and is intertwined with customary and traditional forms of governance. There have been efforts to formalize the sector over the past few years, including through the creation of a dedicated agency to support formalization. However, numerous barriers remain and there is a general lack of incentive for most miners and traders to operate within the legal sector. This leads to a significant amount of Burkina Faso’s artisanal gold being smuggled out of the country under more beneficial financial terms.
The illicit trade in artisanal gold across the country has led to a loss in state revenues and raised alarm bells for potential links to criminality and money laundering. Further, armed groups present in Burkina Faso and across the Sahel, including jihadi groups, have increasingly targeted the artisanal gold sector for their political objectives and to finance their activities.
The issue of access to financing is crucial to efforts to formalize the artisanal gold mining sector and incentivize miners and traders to transition from the illicit to the legal trade.
The artisanal gold mining sector operates on a model based on pre-financing, which is a major determinant of where gold and money flows, and the channels they use. Coincidently, miners often face high levels of exclusion with respect to the financial sector. Many are unable to access financing from microcredit or financial institutions, and are unbanked altogether. This leaves them dependent on informal sources of financing—including from the informal traders buying their gold.
The introduction of financial inclusion mechanisms tailored to artisanal gold mining communities such as Village Savings and Loans Associations (VSLAs), can be a first step towards improving the financial inclusion of artisanal miners and reducing their dependency on more predatory forms of lending
This paper explores the connections between financial inclusion, formalization of artisanal miners, and illicit trade. The research demonstrates why financial inclusion is a crucial component of efforts to formalize the sector and encourage the use of legal sales channels. Further, it examines these issues from a gendered perspective, identifying the specific challenges for women in artisanal mining communities, and how an approach that centers women’s empowerment is necessary for equitable and sustainable formalization efforts.
IMPACT’s research is based on an analysis of previous research on the gold trade in Burkina Faso and wider region, as well as financial inclusion in the artisanal gold mining sector. Research is also supplemented by experiential knowledge gained by IMPACT and data gathered while implementing the Artisanal Mining Women’s Empowerment Credit & Savings project (Autonomisation des Femmes par l’Epargne et le Crédit Communautaire Responsible, known by its French acronym AFECCOR) in Democratic Republic of Congo (DRC), as well as in Burkina Faso through the Foundations for Peace project.
This research examines the artisanal gold mining sector, access to financial inclusion, and how these relate to formalization and efforts to end illicit trade within Burkina Faso. However, the findings of this report can be applied to artisanal gold mining communities in contexts worldwide.
Key Findings
- Formalization of the artisanal gold sector needs to include access to financing as these actors and communities most often don’t have formal financing.
- In the absence of formal financial services, artisanal gold miners and traders rely on informal financing, including from other supply chain actors, to pre-finance activities.
- Informal financing is red-flagged by formal financial institutions as a compliance risk, excluding artisanal miners from accessing them and maintaining their dependence on informal lenders.
- Community savings groups provide opportunities for financial literacy and entry-level financial services to populations who have little-to-no experience in savings and loans, increasing economic security and financial sustainability among members.
- Community savings groups with gender-based approaches can contribute to gender equality in communities and women’s integration in formalization.
- Community savings groups can often evolve into other more formalized artisanal mining groups, putting them on the pathway to formalization and legal trade.
- Community savings groups decrease the dependency of their members on informal, predatory lenders in the artisanal gold sector.
