Artisanal Mining: The Sleeping Giants

Artisanal and small-scale mining (ASM) in Africa employs 4 -5 million people directly and supporting 20-25 million indirectly – it is the second largest sector generating jobs after the agriculture sector. In generates USD 8bn-USD 12 bn annually in direct economic value, contributing USD 3-5 bn in export earnings, though much remains informal, under-recorded and undercounted in the national accounts.

In countries like Kenya, ASM contributes about 0.8% to GDP and significant foreign exchange. In Zimbabwe, ASM gold mining rivals large-scale operations in GDP and export contributions. Africa produces about 40% of global gold, much from ASM, alongside critical minerals like cobalt and tantalum. Despite these benefits, ASM's informality limits its full potential. It is driven by night-time economic activity, rudimentary tools, suffers from theft, inefficiencies, revenue leakage, lost tax income and unscrupulous middlemen.

Formalization is essential to unlock ASM's contributions to GDP. This involves comprehensive legal frameworks, simplifying licensing of miners, designating specific mining “safe” zones to reduce conflicts with large-scale operations, as well as to enhance on-site security. Fintech (AI) solutions can enhance bankability by enabling digital identity for miners, AI-driven credit scoring using alternative data such as “debtor behaviour’’, predictive analytics for safety hazard detection, geological mapping for efficient exploration and supply chain traceability to meet due diligence standards.

In the DRC for example, the artisanal cobalt miners work in hazardous conditions and use child labour, whilst providing a livelihood for millions. A partnership between the DRC government, Trafigura, Chemaf (the concession holder), COMIAKOL – the local co-operative and Pact (international NGO) led a pioneering project, the Mutoshi Pilot Project, to formalise ASM (for cobalt) in the DRC which led to fewer accidents, excluded children and enhanced production significantly. This led to Trafigura signing an off-take agreement with DRC's state entity Entreprise Générale du Cobalt (EGC) in 2020, supporting regulated mining zones, controls, international standards and traceability.

The above is an excellent example of how formalisation unlocked capital for growth and scaling and made ASM projects bankable. Fairer distribution of wealth results, tax collection and GDP increases significantly. Be aware of the sleeping ASM giants in Zimbabwe, Kenya, DRC, Ghana, Tanzania & Uganda.