..insider cartel accused of fleecing RBM
..RBM buying from unlicensed traders
..only 200 kgs bought in 2years
..expert doubt authenticity, quality of gold
There are fears that billions of kwacha might have been lost in gold buying scheme that has seen the Reserve Bank of Malawi only buy 200 kilogrammes of the precious metals since 2021, the Investigator Magazine has been told.
Export Development Fund (EDF) an agency of the RBM has a special projects team that buys gold from anyone, anywhere and then takes it to Lilongwe for initial processing. They buy from all sorts of miners, including illegal mining sites in Lilongwe, Mangochi and Ntcheu.
The Reserve Bank of Malawi spokesperson Dr Mark Lungu gave our query a blue tick sent to his whatsapp message, the same with Governor of the Bank Wilson Banda.
Our source, a senior Bank official said an audit was instituted to look into the gold buying scheme which he described as “chaotic” and “lacking expertise” that the amount of money spent does not reflect the gold being declared at the bank.
“The bank has spent millions if not billions on the scheme, but only less than 200 kilogrammes of gold has been deposited. Dr Banda (The Governor) was recalled from a visit to New York when it became apparent something was amiss,” said a source who broke the news to us.
Mineral expert said while gold takes time to accumulate, especially the type of gold found in Malawi, it was not making economic sense that the bank continues to spend more resources for the small outcome.
K100 billion gold exported from Malawi
President Lazarus Chakwera said in his September 2020 State-of-the-Nation Address to Parliament that Malawi loses K100 billion ($85 million) worth of gold exports annually, which ends up in the Middle East.
In early 2021, the Reserve Bank of Malawi announced that the Export Development Fund (EDF), its developmental arm, will be buying gold from across the country from May 1, 2021.
A report on state owned Malawi Broadcasting Corporation (MBC) quoted the RBM that it will be buying gold to bring sanity into the market.
The Bank promised that it will work with different agencies and departments to implement the gold buying market, but still its uptake of gold is only 200 kilogrammes in two years.
“The gold value from Malawi is pegged at around K100 billion a year. The bank after two years has only managed to buy 200 kilogrammes yet according to the recorded information alot of money has been spent. This means the Bank is buying only 8.33 kilogrammes per month. The gold in RBM deposit means out of potential K200 billion in two years, the RBM has lost out K188 billion gold to illegal traders,” an analyst looking into the sector told us.
There are strong suspicions that RBM staff are engaged in gold buying and reselling of the commodity for personal gain.
How EDF-RBM Buys gold
If you have a gram of gold you can walk into EDF sites in Lilongwe and Liwonde, that is how easy it is, but according to our information cartels have been formed to intercept and buy gold outside the same systems.
“Teams travel to gold mining places, including the illegal and unlicensed ones, and buys the gold. Then it is sent for processing in Lilongwe. The costs of all these are not very clear. At the end of this investment over the years and the quantities do not seem to match,” said someone familiar with the process.
He said it was possible that officers could be buying own gold and export it using the RBM as a cover and the cartel seem to be deeply rooted within the RBM heirachy.
“Gold is good business for those that handle it. There are many stories around it and very secretive too. Ask the Bank how much have they spent in buying and refining the gold, you will be amazed,” challenged another one.
The Bank seemed to have opted to use the EDF at the time the institution was deeply affected by leadership wrangle that has been twice pushed to the Office of the Ombudsman.
A new complaint has been laid at the Ombudsman challenging the newly appointed Managing Director at EDF.
“EDF has not had stable leadership for while, this meant only a few were managing the gold processes. There are special technicians that are handling the gold procurement, processing and depositing at RBM,” added the source.
Our reporter approached the EDF in Lilongwe to sale the gold and we were asked for a number which later someone called and offered to buy “our gold” at a better price than the bank.
The deal fell through as the suggested time was outside working hours and we could not guarantee security of our reporters. We had agreed to meet at a Hotel in City Centre. The call came from a private number.
“It’s chaos. The cartel is deeply rooted within the system and making profits out of the public investment. Unfortunately most bosses have no expertise, its chaos how these things are being done,” said another official from the bank.
The gold prices offered by EDF were said to be far below than the market which made most small scale miners snub the Bank and sold it to middlemen.
Gold mined at large scale, but no benefit
Gold is being mined in Lilongwe, Mangochi, Kasungu, Nkhatabay, Ntcheu, Neno and Salima by mainly small scale miners, many of whom have invaded land which has been described as illegal.
The RBM buying from these sites means they are being legitimatised and encouraging chaos in the mineral sector.
“Bank teams are sent into places where gold is mined and they buy from anyone like vendors too. Its like Admarc officials going in villages to buy maize or Auction Holdings buying tobacco in the villages. This is unheard of a government agency. This is a strange decision by the Bank where it goes and encourages illegal activities instead of bringing sanity in the gold market,” said one of the former officials at EDF.
The Bank said it has no intentions to immediately sell the gold it but the quantities as the quantities.
At the present value the RBM gold reserves if its pure category could fetch K12 billion on the market, which is quite small compared to what is being illegally exported.
Quality, money value
A mineral expert writing to The Investigator Magazine said Malawi currently lacks a proper grading and certification system for gold and gemstones.
“This absence of a reliable certification process raises concerns about the authenticity and value of the precious materials being traded. Moreover, the individuals responsible for purchasing gold and gemstones at EDF lack proper certification, which further contributes to the lack of transparency and expertise in the industry,” he said.
He said the country has only one accredited Gemologist within the civil service commission, highlighting the scarcity of qualified professionals in this field.
“There is no accredited jewelry appraiser in the country, which poses a significant challenge when it comes to determining the true worth and quality of jewelry items,” he wrote suggesting the gold being kept at RBM could be valueless.
He suggested that the Bank needs to develop a robust grading and certification system, along with ensuring proper accreditation for professionals in the field.
“This is crucial to promote a fair and trustworthy gold and gemstone trade in Malawi. Such measures would enhance consumer confidence and foster a sustainable and thriving industry,” he suggested.
He said the Bank should consider a trading system that would bring gold to weekly market which will open up the minerals being stolen by others and help improve foreign exchange shortages.
“By adopting a weekly trading system, the country could benefit from a more frequent influx of foreign exchange, which can be utilized to address pressing financial needs and stabilize the economy. This approach would allow for a more dynamic and responsive management of the gold resources and their contribution to the country’s financial well-being,” he added.
As the system is today, the RBM is perpetuating chaos and potential fraud and spending resources in a chaotic gold market which is not achieving the intended goal of the gold scheme.
Additional materials sourced from The Daily Times and Nyasatimes Newspapers reports published in the past 2 years.