1. Home
  2. Stories
  3. Financial Services
  4. Gold Trade

Mixed reactions as Bank of Uganda goes for gold

BE Editor 15th Jul, 2024 Financial Services Pedson Mumbere
Mixed reactions as Bank of Uganda goes for gold

As a strategic store of value, gold makes a significant portion of the Central Bank's reserves.


The Bank of Uganda (BoU) says it is set to start buying gold from the local market, amid concern over the ramifications on the economy given the country’s unregulated or non-transparent market environment.

The objective of the initiative dubbed, Domestic Gold Purchase Program, is to support the government's value-addition efforts in regard to the country’s mineral resources, mitigate the country's reliance on imports of raw gold, and lift household incomes.

According to the BoU's state of the economy report for 2024, the gold purchase plan is designed to build the country's foreign reserves and minimize risks associated with reserve investments.

  • “This initiative is expected to support the government’s ongoing value addition to the minerals and Import Substitution Strategy by reducing the imports of raw gold into the country. By purchasing gold directly from the artisanal miners, the BoU will also be supporting the livelihoods of artisanal and small-scale miners, and this has positive spill-over effects on other sectors of the economy in line with the Central Bank’s mission of supporting the governments socio-economic transformation,” the report reads in part.

It adds; “With the BOU plan to purchase gold locally from the artisanal miners to complement existing measures to accumulate international reserves, imports of raw gold are expected to reduce, contributing to the reduction in total imports, in turn leading to a decrease in both trade deficit and current account deficit.”

According to the BoU, the importation of raw gold has been a substantial drain on the country's finances. The latest figures indicate that Uganda loses approximately $200 million annually from the import of raw gold.

  • Speaking at the ‘Gold in Banking Conference’ held in Kampala on July 11, various stakeholders were cautiously positive about the development saying it was a welcome move.
Mixed reactions as Bank of Uganda goes for goldDr. Michael Atingi-Ego, the Deputy Central Bank Governor

Kepher Kuchana, the Director the Government Analytical Laboratory at the Ministry of Internal Affairs, who represented his Minister Kahinda Otafiire, urged BoU to adopt a framework to curb illicit gold markets and to ensure buy-in from all the stakeholders. James Byaruhanga, an artisanal miner from Mubende, expressed optimism about the program, describing it a “game-changer.” “For years, we have struggled to find stable markets for our gold. The BOU’s initiative is a game-changer for us. It not only guarantees a fair price for our hard work but also recognizes the importance of our contribution to the economy."

It is not yet clear when the Domestic Gold Purchase Program would kick off officially or how it would be regulated, but some experts say it should be handled with care as it may come with some ramifications for the economy.

One of the BoU’s key functions is to manages Uganda's foreign exchange reserves – held in hard currencies, gold and other assets - and to intervene in the foreign exchange market to stabilize the exchange rate and ensure orderly market conditions.

Gold reserves act as a hedge against inflation and as a financial cover during geopolitical and macroeconomic uncertainty. Gold is considered a low-risk asset compared to other investments. Central banks often use gold to manage risks associated with fluctuations in currency values and interest rates.

  • Holding a substantial amount of gold reserves could enhance a central bank's credibility and inspire confidence among investors and the public regarding the stability of the country's financial system. Also, Central banks may strategically acquire gold as part of a long-term plan to strengthen their economic position globally or to influence international financial markets.
  • However, some Central banks avoid getting involved in buying gold locally due to con-cerns over market stability, regulatory compliance and logistical challenges, and the need for internationally recognized standards of security and authenticity of the com-modity. For example, local gold purchases could be vulnerable to manipulation or insid-er trading, and more so given our unregulated or non-transparent market environment

Also, for the Central bank as a bulk purchaser of gold, buying large quantities of gold locally could distort local prices and disrupt the market, potentially leading to volatility or speculation.

In recent years, Uganda has emerged as one of the continent’s leading gold refiners and exporters. However, pressure has been mounting on gold producers in regard to rampant tax evasion, prompting URA to caution airlines operating in Uganda not to accept any gold shipments from Uganda unless the exporters have proof of settling their tax obligations.

Last year, Parliament passed the Mining and Minerals Export Levy on Refined Gold Regulations 2023 that provided for an export levy of 5% on the value of refined gold for export as well as a 10% tax on unrefined gold. It is not yet clear how BoU’s proposed Domestic Gold Purchase Program would impact URA’s revenue collection efforts.

Similar Posts You May Like 

  • MTN Uganda awarded as the fastest mobile network in Uganda

    MTN Uganda awarded as the fastest mobile network in Uganda..

    25 th January 2023 - Kampala, Uganda: MTN Uganda has been recognized for the top position as the mobile operator with the fastest internet speed in Uganda, according to user-initiated tests completed on Speedtest® by Ookla®, a global leader in mobile and broadband network intelligence, testing ..

  • BIRDIC Commissions New Generation Tuku Tuku Vehicles to Improve Tooke Distribution

    BIRDIC Commissions New Generation Tuku Tuku Vehicles to Improve Tooke Distri..

    The Banana Industrial Research and Development Center (BIRDIC) whose mission is to use research to develop and market banana-based valued-added products, is embarking on a drive to popularize Tooke flour and related products, by improving their distribution network countrywide. BIRDIC is the succe..

  • Government reaffirms support to scientists

    Government reaffirms support to scientists..

    President Yoweri Kaguta Museveni has warned public officials against taxing innovations, saying there's no logic in taxing innovations when Uganda gives tax holidays to products that are not the result of new ideas...

  • Anxiety As Donor Aid to Uganda Slumps

    Anxiety As Donor Aid to Uganda Slumps..

    Declining donor aid means a higher tax burden on citizens and more foreign debt to bankroll notoriously high public expenditure. Concern is rising as donor cash continues to take a downward slide, which analysts say reflects the escalating levels of donor fatigue and a vote of no confidence over cor..

  • Capital Markets Authority Gets New Boss

    Capital Markets Authority Gets New Boss..

    Ms Josephine Ossiya has been appointed Chief Executive Officer of the Capital Markets Authority (CMA)...

  • New DTB, KACITA partnership to boost women enterprises

    New DTB, KACITA partnership to boost women enterprises..

    Diamond Trust Bank and the Kampala City Traders' Association (KACITA) have entered a partnership aimed at boosting small businesses and entrenching Environmental, Social and Governance (ESG) principles in the country...

  • Stanbic Uganda Holdings Gets New Boss

    Stanbic Uganda Holdings Gets New Boss..

    Mr. Francis Karuhanga has been named the new Chief Executive Officer of Stanbic Holdings Uganda Ltd, replacing Andrew Mashanda, effective January 1, 2024...

  • Crane Bank Sale: Top BoU, DFCU bosses face prosecution

    Crane Bank Sale: Top BoU, DFCU bosses face prosecution..

    The Supreme Court of the United Kingdom has blocked DFCU Bank’s attempt to sidestep the prosecution of its top bosses in a case where they are accused of fraudulently transacting in Crane Bank’s assets in collusion with officials of the Bank of Uganda...

  • 140 to lose jobs as BoU revokes EFC's licence

    140 to lose jobs as BoU revokes EFC's licence..

    More than 140 employees of EFC Uganda Ltd, a microfinance deposit-taking institution, are sweating over their next move following a decision by Bank of Uganda to wind up the institution. The institution’s licence was revoked effective January 19, 2024. ..

  • Financial Markets: Uganda Top In EAC

    Financial Markets: Uganda Top In EAC..

    Uganda has once again asserted its dominance in the East African financial landscape, with the latest Absa Africa Financial Markets Index, highlighting the country's remarkable growth trajectory. ..

  • Top NCBA clients to enjoy premier banking service

    Top NCBA clients to enjoy premier banking service..

    NCBA Bank Uganda has made waves in the banking sector with the unveiling of its revamped Premier Banking offering, given the array of exciting benefits and exclusive discounts for its esteemed clientele. ..

  • DTB, TerraPay ease money transfer

    DTB, TerraPay ease money transfer..

    TerraPay, a top European money transfer company, and Diamond Trust Bank Uganda (DTB), have announced a strategic partnership to expand international money transfers and strengthen financial inclusion in Uganda...

  • Semakula appointed SBG Securities boss

    Semakula appointed SBG Securities boss..

    SBG Securities, a subsidiary of Stanbic Uganda Holdings, has named Grace Semakula as its new CEO, effective March 1...

  • Diamond Trust Bank, UAP in new partnership

    Diamond Trust Bank, UAP in new partnership..

    Diamond Trust Bank Uganda and UAP Old Mutual Insurance Uganda have entered a partnership to deliver general and life insurance products and services, which effectively makes the bank a one-stop centre for both banking and insurance services, aimed at drive insurance penetration and inclusion...

  • Stanbic declares UGX155 billion in dividends

    Stanbic declares UGX155 billion in dividends..

    Stanbic Uganda Holdings Ltd, the mother company of Stanbic Bank Uganda, have published their annual financial report for the year ended 2023, which has seen the Board of Directors recommending a payment of UGX155 billion in dividends to the company�s shareholders...

  • Sebaana new DTB boss as Thambi exits

    Sebaana new DTB boss as Thambi exits..

    Diamond Trust Bank Uganda (DTBU) has named Godfrey Sebaana as its new CEO and Managing Director, effective April 2, 2024...

  • New report highlights serious gaps in NSSF benefits

    New report highlights serious gaps in NSSF benefits..

    The majority of people who received their benefits from the National Security Fund (NSSF) did not acquire any form of financial literacy before receiving their cash, which severely undermined how they spent the money, a new report has shown. ..

  • Will new online lending guidelines foster responsible borrowing?

    Will new online lending guidelines foster responsible borrowing? ..

    Last month, the Uganda Microfinance Regulatory Authority (UMRA) introduced digital lending guidelines tailored for microfinance institutions (MFIs) and online lenders in a bold move towards shaping responsible lending and borrowing practices. This move signaled a concerted effort to address the ch..

  • Young golfers shine at NCBA Golf Open

    Young golfers shine at NCBA Golf Open ..

    Junior golfers from five different countries have demonstrated their talent and passion for the sport at the NCBA Uganda Golf Open 2024, hosted at the Lake Victoria Serena Golf & Spa Resort in Kigo. ..

  • Inflation: Bank of Uganda raises CBR again

    Inflation: Bank of Uganda raises CBR again ..

    For the second month in a row, the Bank of Uganda has raised its key rate, the central bank rate (CBR) in a bold move to combat inflation...

  • Will new guidelines mop up online lending mess?

    Will new guidelines mop up online lending mess?..

    Moses Nkonge desperately needed cash to put windows and doors in his family house having got fed up of renting. A friend suggested that he gets a loan from an online lending platform. Indeed, he got the money in no time and finished his house...

  • New UDB incubator plan targets 290 entrepreneurs

    New UDB incubator plan targets 290 entrepreneurs..

    The Uganda Development Bank, Uganda's national development finance institution, has announced the launch of an incubator programme designed to prepare hundreds of young entrepreneurs for the funding they need to scale up their businesses...

  • NCBA Bank buoyed by UGX27 bn net profit

    NCBA Bank buoyed by UGX27 bn net profit..

    Corporate banker, NCBA Bank Uganda has announced its financial results for the fiscal year 2023, showcasing robust growth and profitability driven by strategic investments in a strong performance culture...

  • I&M Bank partners with Nnaabagereka for Queen's Ball

    I&M Bank partners with Nnaabagereka for Queen's Ball..

    I&M Bank Uganda has partnered with the Nnaabagereka Fund to organise the first Queen's Ball, aimed at raising funds to support women, youth, and children with mental issues. ..

  • Bankers protest proposed ATM cash tax

    Bankers protest proposed ATM cash tax..

    Commercial banks have objected to the government proposal to impose a 0.5% levy on all cash withdrawals made through ATMs, saying the move would be counterproductive...

  • NCBA Bank partners with NFA to plant 20,000 trees

    NCBA Bank partners with NFA to plant 20,000 trees..

    Corporate banker, NCBA Bank Uganda, has entered a partnership with the National Forestry Authority (NFA) for an ambitious initiative to re-plant 20,000 trees in the Jubiya Forest Reserve in Masaka District, as part of efforts to replace the dwindling forest cover across the country...

  • Salaried employees warned on saving

    Salaried employees warned on saving..

    Individuals and businesses should take advantage of the current fragile economic situation to adopt a culture of saving, which is crucial for sustaining the growth of their social well-being...

  • UBA elects new Board as assets soar to UGX50 trillion

    UBA elects new Board as assets soar to UGX50 trillion..

    Members of the Uganda Bankers Association (UBA) have voted Julius Kakeeto as their new chairperson, replacing Sarah Arapta. ..

  • BoU chief salutes DTB’s Thambi over exceptional performance

    BoU chief salutes DTB’s Thambi over exceptional performance..

    The Bank of Uganda Acting Governor, Dr Michael Atingi-Ego has hailed Thambi Verghese, the outgoing managing director of Diamond Trust Bank Uganda, for transforming a previously small bank into the financial services giant it is today...

  • New NCBA branch to serve Namanve investors

    New NCBA branch to serve Namanve investors..

    NCBA Bank has opened a new branch, strategically located in Namanve Industrial Park near Kampala, a development officials said underscores the bank’s commitment to developing and supporting large businesses in the country..

  • UDB, Centenary Bank scoop top banking accolades

    UDB, Centenary Bank scoop top banking accolades..

    The Uganda Development Bank (UDB) and Centenary Bank, an indigenous Ugandan bank, have won awards at the prestigious Banker of the Year Awards held in Nairobi, Kenya, on May 29...

  • NCBA Bank injects UGX80m into 2024 Golf Series

    NCBA Bank injects UGX80m into 2024 Golf Series..

    NCBA Bank Uganda in conjunction with the Uganda Golf Club, have launched the 2024 NCBA Golf Series, a premier event aimed at advancing the sport of golf and fostering excellence within Uganda’s golfing community. ..

  • Stanbic’s FlexiPay starts global money transfer

    Stanbic’s FlexiPay starts global money transfer..

    Ugandans working in the United Arab Emirates, the United Kingdom, the United States, South Africa, Kuwait, and more than a dozen other countries can now send money home, thanks to a new partnership between FlexiPay, Stanbic Bank’s digital payment platform, the International Fund for Agricultural D..

  • Why BoU closed Mercantile Credit Bank

    Why BoU closed Mercantile Credit Bank..

    The banking industry is reeling with shock following the decision by the Bank of Uganda, the regulator of the financial services industry, to close down Mercantile Credit Bank Limited, after over three decades of operation...

  • New MTN’s Zimba initiative to boost small businesses

    New MTN’s Zimba initiative to boost small businesses..

    MTN MoMo has launched a new initiative designed to empower small and medium-sized enterprises (SMEs) across Uganda. ..

  • Stanbic unveils unit trust investment option

    Stanbic unveils unit trust investment option..

    Stanbic Uganda Holdings Ltd, the mother company of SBG Securities Ltd, has unveiled its unit trust, aimed at enabling individuals and companies to pool their money to create a large fund that generates daily income...

  • NCBA Bank commits millions to central forests restoration

    NCBA Bank commits millions to central forests restoration..

    NCBA Bank Uganda, in collaboration with the National Forestry Authority (NFA), has embarked on the restoration of degraded forests across the country. ..

  • Insurance industry premiums top UGX1.6 trillion

    Insurance industry premiums top UGX1.6 trillion ..

    The Ugandan insurance sector displayed remarkable resilience and growth in 2023, with Gross Written Premiums (GWP) increasing by 11.3% to reach UGX1.6 trillion year-on-year. This performance, highlighted by the new Insurance Regulatory Authority (IRA) report, highlights the sector's strength and str..

  • Consolidate cross-border collaboration, regional bankers told

    Consolidate cross-border collaboration, regional bankers told..

    Stakeholders in the banking industry in the East African Region have been urged to find ways of working together more closely in a bid to strengthen their regional economies...

  • Stanbic Business Incubator gets new boss

    Stanbic Business Incubator gets new boss..

    Stanbic Holdings Uganda Ltd has announced the appointment of Catherine Poran as the Chief Executive Officer of Stanbic Business Incubator...

  • DTB plants UGX90m in Kasonke Forest Reserve

    DTB plants UGX90m in Kasonke Forest Reserve..

    Diamond Trust Bank Uganda has entered a partnership with the National Forestry Authority to restore degraded parts of Kasonke Central Forest Reserve...

  • UDB registers UGX 50 billion profits

    UDB registers UGX 50 billion profits..

    The Uganda Development Bank (UDB) has announced its 2023 annual performance report, highlighting its continued role in fostering economic resilience and sustainable growth in Uganda. ..

  • Stanbic Bank assets, net profits surge

    Stanbic Bank assets, net profits surge ..

    Stanbic Uganda Holdings Limited has announced a significant improvement in its financial performance, with total assets reaching UGX9.7 trillion, a 3.8% increase from UGX9.4 trillion the previous year. ..

  • Diamond Trust endorses UN responsible banking principles

    Diamond Trust endorses UN responsible banking principles ..

    Diamond Trust Bank (DTB) has become the latest financial institution to sign the UN Principles for Responsible Banking, which aim to align the banking sector with the goals of the UN Sustainable Development Goals (SDGs) and the Paris Agreement on climate change...

  • The Top 10 strongest currencies in 2024

    The Top 10 strongest currencies in 2024..

    Globally, the United Nations recognizes 180 currencies as legal tenders. The factors that determine the strength of a currency include the amount of the currency held by other countries as foreign reserves, demand and supply in foreign exchange trading (buying and selling of currencies, in pairs, w..

  • DTB earmarks UGX400m for youth health initiative

    DTB earmarks UGX400m for youth health initiative..

    The United Nations Population Fund (UNFPA) and Diamond Trust Bank (DTB) Uganda have signed a partnership worth USD106,458 (about UGX400 million) as a contribution to efforts aimed at reducing school absenteeism and improving menstrual hygiene for young girls in Uganda’s marginalized communities. ..

  • Bank loans grew by 6.8% in 2024, says BoU

    Bank loans grew by 6.8% in 2024, says BoU..

    Commercial bank lending activities in Uganda have shown a robust increase, growing by 6.8% in the financial year ending June 2024, according to the Bank of Uganda. ..

  • Watu Uganda celebrates global service accolade

    Watu Uganda celebrates global service accolade ..

    Watu Uganda, one of the country’s leading asset-financing companies, has been awarded the prestigious Client Protection Certification award...

  • Fintech industry stimulating local economies

    Fintech industry stimulating local economies..

    Uganda is embracing the digital age, and the fintech sector is growing rapidly, transforming how people access financial services. At the forefront of this change is MTN Mobile Money (U) Ltd (MTN MoMo), a leader in mobile financial services that is making it easier for Ugandans to engage with their ..

  • Unit trusts total assets soar to UGX 3.5 trillion

    Unit trusts total assets soar to UGX 3.5 trillion..

    Uganda's financial assets under management (AUM) in the Collective Investment Scheme (CIS) market have hit an all-time high, reaching UGX 3.5 trillion (approximately US$ 945.4 million) as of September 2024. ..

  • Five men remanded after phone-flashing crackdown

    Five men remanded after phone-flashing crackdown..

    A crackdown on the growing menace of identity theft, phone theft and flashing fraud has resulted in the arrest and prosecution of five men. ..

  • DTB customers to receive cash at no cost

    DTB customers to receive cash at no cost..

    Diamond Trust Bank Uganda (DTB) has partnered with Xpress Money, an international money transfer service, to enable customers to receive money in over 170 countries worldwide at no cost. ..

  • DTB enters mobile phone lending segment

    DTB enters mobile phone lending segment..

    Diamond Trust Bank (DTB) and Credable Group have entered a partnership through which Ugandans will be able to borrow microloans via Airtel Money...

  • Relief as Gov’t sets interest rates for money lenders

    Relief as Gov’t sets interest rates for money lenders..

    In a bold move aimed at tightening the noose on unscrupulous money lenders, the Government has published Legal Instrument 21 of 2024, which caps interest rates on loans at not more than 2.8% per month (33.6% per annum)...

  • MTN, Mastercard launch e-commerce platform

    MTN, Mastercard launch e-commerce platform..

    In another first, MTN Uganda has become the first subsidiary of the MTN Group to launch an e-commerce platform, aimed at giving Ugandans a seamless online selling and shopping experience...

Most Recent

Popular Links