Picture: Simon Dawson/Bloomberg - A worker uses a hammer and a letter punch to engrave gold bars with identifying marks at the Kibali gold mine operated by Randgold Resources Ltd, in Kibali, Democratic Republic of Congo.
By Koffi M Kouakou
God and gold are plenty in Africa. Both are found everywhere on the Continent.
Churches, preachers, mosques, imams, synagogues and traditional sorcerers flourish and have profitable spiritual businesses. Their exact numbers are unknown.
In South Africa alone, an estimated 7, 000 churches are recorded. But I suspect this number could be smaller given the dynamic growth of spirituality in the country. It reminds me of the Biblical notion of the multitude, that exponential sense of no limit with infinite abundance.
So, when I heard about the new discovery of gold in Uganda, I was not surprised at all. Gold galore, I assumed. But when I read the fine print headline in Mining Review Africa of June 29, 2022 and the confirmation by president Yoweri Museveni himself, in his state-of-the-nation address on June 7, that the discovery of 31 million metric tons was worth 12 trillion US dollars, I gasped.
Uganda is now rich beyond anything.
I said, pinch me. And Pinch me again. That’s unbelievable! It cannot be true. It must be an anomaly. Such a quantity of gold breaks all records, if properly vetted and certified.
I couldn’t fathom the incredible news as such a quantity of gold seems to defy any known discovery in the history of mankind. The declared numbers are way too high to trust, and their claim seem suspicious.
While the announcement of the image of a new el dorado in Uganda is attractive, I remain sceptical about the figures. Nonetheless, my superficial scepticism is a mere matter of incredulity. Nothing much. I am thrilled about such a monumental discovery of gold in Uganda. If true, Ugandans can finally hope for a better future when the revenues of the mined gold riches their pockets, of course.
The gold discovery in Uganda reminds me of three little vignettes about the history of gold in Africa.
The story of the legendary golden Emperor of Mali, Mansa Musa or Kankan Musa, the ninth mansa or king of kings of the Mali empire who was said to be the richest man in world history and worth US$ 400 billion in today’s currency. At the zenith of his reign, power and prestige, he was also known to rule a golden era of the Malian Empire.
More so, his wealthy empire boasted so much gold that, during his well-recorded pilgrimage to Mecca via Cairo in Egypt in 1324 where he carried and gifted some of it across his journey, the gold market crashed for a decade. The news of his pilgrimage to Mecca attracted the attention of the Muslim world and later the powerful European nations that led to what is today known as the scramble for Africa in the late 19th century.
More recently, the story of Muammar Ghaddafi’s gold and his project to create a gold dinar currency for Africa to compete against major world currencies, suspiciously got him killed. Today, nobody knows where Ghaddafi’s gold is stored. But speculations are abuzz that it was stolen by Western powers fearful of a new gold-pegged African currency that would threaten the dominance of the US dollar and the euro.
Then there is also the latest story of the newly issued gold coin as currency to fight against extreme inflation in Zimbabwe. While some believe it’s a self-enrichment scheme and scam for the elites, many see it as a potential opportunity to help turn the economy of Zimbabwe around. Optimists think it’s a brave attempt to rescue the failed and agonising economy with a meaningful new gold metric to achieve a recovery away from the everlasting shenanigans of politicians. Whichever way it is, one must be sceptical until the evidence screams for itself toward a golden future for Zimbabwe. I suspect we are not there yet.
One thing is sure, these three vignettes illustrate the tip of the iceberg about the modern history and the discovery of gold in Africa and what it could mean geopolitically.
Peter L Bernstein tells the remarkable story of gold in his famous book The Power of Gold: The History of an Obsession. Gold remains an obsession and its relationship with global currencies from the old gold standard to the Bretton Woods standard, after World War II, have framed the power of dominant global currencies, such as the US dollar, the British pound and others. I shall come back to that in my next instalment.
But what is important is amid the chaos of global uncertainty with the war in Ukraine, the seismic news of the discovery may not be good for Uganda and Africa, if history is of any guide. The discovery has both domestic and geopolitical implications.
If validated, it will attract a great deal of economic interests and create both due and undue visibility to Uganda. And sooner, visibility could lead to vulnerability both at home and abroad. There are already caustic jokes on the internet about the US-led West jetting to Uganda with a basket of democratic and human rights offerings to mine the new deposit away from the Chinese company already in charge and help save Ugandans from themselves.
“If the above announcement is true and that the enormous figures are genuine and not fudged, the discovery has enormous implications for Uganda, Africa, the gold market world-wide and geopolitical consequences as well,” said professor Patrick Bond of the University of Johannesburg.
He alluded to a comparative discovery of natural resources in Zimbabwe.
“The dilemma that Robert Mugabe found in eastern Zimbabwe – where there was $15 bn of diamonds but $13 bn disappeared – is that whether it is a Western or Chinese mining house, the country will be ripped off,” he said.
Moreover, he pointed that “incidentally, one of the consequences of the Russian invasion of Ukraine has been that Russia has pegged the ruble to gold, helping to revive great interests in the backing of currencies with gold”.
“Hang on,” he said again, “since March the gold price has fallen 17 percent (from $2050 to $1700/ounce), so where is the "great interest" in the world market?” (See the recent gold price fluctuations below as of July 26, 2002).
And this week Russian foreign minister, Sergey Lavrov, was visiting three African countries and his first whistle stopover was Uganda. Interesting coincidence, with the gold discovery in Uganda? No one knows for sure. But speculations are rife that Russia may be interested in the large gold deposits.
Economically, Bond says the gold discovery in Uganda means “more looting of their historical natural resource wealth, which will be especially tough on future generations, as well as progressives in Uganda, who will be repressed even more by the Museveni dictatorship”.
When I asked him about the geopolitical implications, and if the West and key members of the BRICS, such as Russia, China and India, will battle it out on the African continent to control gold assets and production, he said “that is a terrible fate, eh... if eastern Zimbabwe is any example, Museveni will posture more with Look East rhetoric and finally express terrible disappointment at how much wealth disappears”.
On gold discovery as a curse or a fortune for Uganda's development, he replied that “until Ugandan firms with a commitment to building a national sovereign wealth fund emerges, it is a curse – just like nearly all African mineral extraction processes represent a net drain of wealth, using natural capital accounting”.
Regarding lessons that other African countries and leaders could learn from this natural resource discovery in Uganda, Bond was blunt. “Not yet - the other way around, insofar as virtually all gold production in Africa has been supremely super-exploitative of the host society,” he said.
Is this gold discovery in Uganda a Godsend, a covert tragedy or a curse?
Some talk about the connection of gold and God in Uganda. I doubt it is a path to consider. God may have nothing to do with it. Yet, it is interesting and funny to explore the potentially conspiratorial and lethal combination of gold and God – a golden theocracy of sort.
That’s the unfortunate side of the geopolitical implications of the discovery of gold in Uganda.
In my next op-ed, I will tease a more upbeat and fortunate view of the geopolitics of gold discovery in Africa. Furthermore, I will touch on the history of gold in Africa and its coming geopolitical consequences, and more important, why should African care about a difficult yet golden future for the Continent?
A golden bounty in Ugandan could spell a golden Africa that will not keep begging for alms with so much wealth in its soil.
Hopefully, Uganda as with many African countries, will not be seized by the Chinese story of “the beggar with the golden bowl” syndrome. It is the story of a beggar who continuously asks for food and hardly realises that he holds a golden bowl of greater value.
It is a powerful yet sad metaphor that applies to most African leaders, their nations and the massive natural resources wealth they possess while they still beg for food from Ukraine, Russia, Europe or any other parts of the world.
Africa’s place, in the coming global resource and gold-pegged economy battle, makes it a continent of choice and a potential player in the geopolitics of the gold market value chain. Will Africa position itself on time to benefit from the coming shift with trustworthy partners?
Koffi M Kouakou is Africa analyst and senior Research Fellow at The Centre of Africa-China at the University of Johannesburg
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