Between the State and Smuggling: Where Gold Export Policies Come From

Sudan Events – Agencies

On September 14, 2025, the Central Bank of Sudan issued a new directive restricting the purchase, marketing, and export of artisanal mining gold and gold from mining residue companies exclusively to the bank. Mining concession companies were allowed to export up to 70% of their production after selling 30% to the central bank.

The bank confirmed that it would purchase gold at global market prices as well as prevailing local rates, signaling the adoption of a realistic exchange rate to avoid repeating past mistakes. Exporters were required to deposit the proceeds of exports into Sudanese accounts within 21 days of shipment, ensuring that dollars flow through the banking system rather than remaining abroad or in the black market. Exporters were also permitted to use export proceeds to import goods, with allocations of 70% for strategic goods and 30% for other goods.

This step comes as Sudan faces a severe foreign currency crisis and unprecedented collapse of its national currency amidst a war that has raged since April 2023. The Sudanese pound fell from around 600 per US dollar before the war to record levels exceeding 3,000 in the parallel market by late 2025, triggering massive inflation. With most other productive sectors in decline due to conflict, gold has emerged as a primary source of foreign currency, representing an estimated half of Sudan’s exports in recent years.

However, despite its growing importance, official gold exports remained very low compared to actual production due to rampant smuggling and erosion of state control over this vital sector. Official figures indicate a large gap between production and formal exports, sometimes showing that up to 70% of production does not enter official channels. In July 2025, the Director-General of the Mineral Resources Company, Mohamed Taha Omar, told media agencies that about 48% of Sudan’s gold produced in 2024 was smuggled, leaving only 52% for official channels.

In August 2025, the UAE—which accounts for approximately 95% of Sudan’s officially exported gold—imposed a ban on all imports from Sudan, including gold, as part of international pressures related to the war, according to gold exporters interviewed by Atar. This came as an additional shock, prompting decision-makers to accelerate exceptional measures to rescue the deteriorating economy.

Concerns were raised about potential side effects of this policy. Economist Hani Abu Aqla warned that reintroducing a state monopoly over the gold trade—a policy previously tried and failed to curb smuggling—might backfire if not implemented differently this time. Previously, between 2011 and 2017, monopoly policies led miners to avoid selling to the state due to unrealistically low official exchange rates, pushing them toward smuggling and expanding the black market.

Meanwhile, the government’s Economic Committee argued that Sudan’s current exceptional circumstances require bold measures. This time, the monopoly would incorporate lessons from the past, especially unifying the exchange rate and providing fair prices for miners.

Since the independence of South Sudan, Sudan lost over 80% of its export revenues, primarily petroleum exports, making gold an essential alternative source of foreign currency. Yet smuggling continued to undermine its impact, reflected in the significant differences between production and official exports. For example, between 2015 and 2018, official export records reported only 20–40 tons annually from a production of 80–107 tons each year. A 2016 study of 18 mines across Sudan estimated that around 153 tons of gold were smuggled between 2014 and 2018.

Between 2019 and 2022, some reforms temporarily narrowed the gap, but the outbreak of war in 2024–2025, combined with increased production and weak oversight, caused smuggling to rise again, reaching roughly 60% of gold produced in 2024. This persistent loss meant Sudan forfeited billions of dollars in potential revenue. For instance, exporting the 107 tons produced in 2017 at global prices (about $40,000 per kilogram at the time) could have yielded over $4 billion, yet only about $1.5 billion officially entered the state treasury—a loss of approximately $2.5 billion.

Government policies played a major role in facilitating smuggling. Following South Sudan’s independence, the Central Bank of Sudan held exclusive rights to purchase and export locally produced gold. While the stated aim was to accumulate foreign currency to support the pound and fund essential imports, mandatory pricing tied to the official exchange rate incentivized miners and traders to smuggle gold abroad for higher returns, fueling black market networks across borders. Over 80% of production came from artisanal mining, much of which was smuggled directly without passing through Khartoum.

By 2017, the government recognized the gravity of the situation amid currency volatility. The pound had fallen from roughly 5 per USD in 2011 to 16 in 2016, reaching about 27–30 in the parallel market by late 2017. The government cautiously eased monopoly restrictions, allowing private sector companies to export gold under limited conditions. New policies required private companies to sell half their production to the Sudan Gold Refinery and export the remainder, slightly improving reserves. However, by November 2017, amid rapid currency deterioration, the government reinstated the Central Bank monopoly more strictly. This emergency measure failed to curb smuggling or strengthen reserves.

After Bashir’s regime fell in April 2019, the transitional government implemented structural economic reforms, including liberalizing the gold market while maintaining official oversight. In early 2020, the Central Bank effectively ended its monopoly on gold purchases and exports, permitting producers—including small miners—to export the majority of their production while selling a designated portion to the bank. Mining companies could export 70% of their output while selling 30% to the bank, whereas artisanal miners and mining residue companies could export 15% and sell 85% to the bank. The policy also allowed foreign or local entities to export Sudanese gold after completing procedures and advance payments.

In February 2021, Sudan floated its currency and unified the exchange rate, narrowing the gap between official and parallel rates. This enhanced the gold policy’s success by aligning local gold prices with global prices, reducing incentives for smuggling. Official gold proceeds increased in 2020–2021, supporting pound stability. For example, production was 35.7 tons in 2020, with official exports reaching 25 tons; by 2022, 41.8 tons were produced, 34 tons officially exported, generating $2.02 billion and reducing inflation to around 90%.

Yet roughly a third of production remained outside the system in 2021–2022. Despite this, the system was more flexible and efficient than before, allowing producers to export directly and remit proceeds through banks rather than selling centrally at artificially low prices.

The outbreak of war in April 2023 reversed these gains. State institutions faltered, security collapsed, particularly in key production areas (Darfur and the Blue Nile), and smuggling surged again. The government responded with emergency economic measures, forming a Supreme Economic Emergency Committee chaired by Prime Minister Kamel Idris. In September 2025, this committee issued strict recommendations, resulting in the new Central Bank directive.

The directive effectively restores the Central Bank as the primary purchaser and exporter of gold, reducing intermediary proliferation. This organized monopoly is intended to curb smuggling by controlling production and export volumes.

In the short term, a guaranteed large buyer like the Central Bank incentivizes production and encourages producers to use official channels, ensuring their gold has a secure market at prices aligned with global rates. Policies focus on organizing the traditional mining sector under official oversight, using bank-certified agents or purchase points in production areas, enhancing efficiency and reducing chaos.

For foreign investors, restrictions may pose some drawbacks, but the policy allows concession companies to export most of their output after selling the required portion to the Central Bank and retain proceeds abroad per production-sharing agreements.

The government expects these measures to increase official gold exports by reducing smuggling and mandating unified channels. A senior Central Bank official, speaking on condition of anonymity, told Atar that the policy could narrow the gap between production and official exports in 2025 if successful, raising officially channeled production to 70% or more.

The policy requires 100% advance payment in dollars at global prices before export, ensuring foreign currency enters Sudan before gold leaves. Raw gold must be refined locally before export, preventing quality or quantity manipulation.

A unified gold export platform launched in late 2024 tracks each shipment digitally from collection to proceeds return, reducing customs or financial evasion. Most fees have been waived, and ongoing negotiations with the Chamber of Commerce aim to provide fee-free services for exporters.

Overall, the measures aim to return a large portion of gold trade to the official banking system after years of parallel market dominance. This should increase dollar flow through official channels, ease shortages, stabilize the pound, and reduce inflationary pressures on essential commodities such as fuel and flour.

Challenges remain: fears of monopolization, potential underpricing of gold, liquidity pressures on the Central Bank, and security risks from smuggling networks exploiting the ongoing conflict. Success depends on improving security conditions and continued international monitoring of gold flows.

Source: Atar