By Tumwine Byaruhanga
The Bank of Uganda has started buying gold from local miners under a new three year pilot programme aimed at strengthening the country’s foreign exchange reserves.
Test purchases began on April 17, with the central bank now entering the domestic gold market as a direct buyer.
Under the arrangement, the Bank will purchase gold from licensed and prequalified miners, paying in Uganda shillings based on international market prices. The gold will be delivered to approved refineries for assaying, then refined locally or processed to meet international standards before being added to Uganda’s reserves.
Officials say the programme is designed to widen the country’s reserve base while reducing exposure to external risks linked to traditional reserve instruments.
The initiative also targets the gold value chain. By buying directly from miners and refining locally, authorities expect to increase value addition and bring more of the trade into the formal economy.
A chain of custody system has been put in place to track gold from mine to final storage. Developed with the Ministry of Energy and Mineral Development, the system is intended to verify origin and limit illicit trade, in line with regional certification requirements.
The central bank has obtained a Mineral Dealer’s Licence and is registered with the Financial Intelligence Authority to meet anti money laundering and counter terrorism financing rules.
The three year pilot will test pricing, logistics, storage and compliance systems before any expansion.
The programme was developed with input from several government agencies, including the Ministry of Finance, Uganda Revenue Authority, National Environment Management Authority, the Solicitor General, Financial Intelligence Authority and the Uganda National Mining Company.
