The Bank of Uganda (BOU) has started a new pilot program to buy gold mined in Uganda. The move is part of a plan to increase the country’s foreign reserves and stop the illegal gold trade, which has become a big problem for the economy.
Gold is currently Uganda’s biggest export, making up about 44% of the country’s total exports. However, the sector faces serious challenges, including weak regulation, illegal smuggling, and money laundering, according to the Financial Intelligence Authority (FIA).
Most gold in Uganda is produced by small-scale, informal miners who operate outside the law. This makes it easy for criminals and smugglers to use the sector for illegal activities. The central bank hopes the new program will bring order and transparency to the gold trade.
“We will only buy gold that is mined in Uganda,” said Michael Atingi-Ego, the Governor of the Bank of Uganda. “Our focus is on creating a clear and traceable supply chain.”
In April, the bank issued a tender for a one-year agreement with licensed gold suppliers and refineries, with an option to extend the deal.
Key conditions for suppliers include:
Gold must be delivered to a domestic refinery approved by the central bank.
Payment will be made in Ugandan shillings within 30 days after delivery and invoice submission.
The program will run as a pilot project for 2–3 years before a final decision is made.
Even with these measures, experts are worried about weak systems for tracking gold.
Bwesigye Binyina, the Executive Director of the Africa Centre for Energy and Mineral Policy, said the current system cannot fully prove where the gold comes from.
“The people delivering gold to refineries are usually middlemen, not the actual miners,” Binyina said. “This means a refinery could produce a tonne of gold, but only a small part of it can be traced to the source.”
This raises fears that gold purchased by the central bank could be labeled as “contaminated” under international standards, creating a risk for Uganda’s reputation and trade relations.
The Financial Intelligence Authority (FIA) also reported low compliance in the sector. Of the 77 licensed precious metals dealers, only 34 are registered with the FIA. Worse still, no cases involving gold dealers have gone to court, despite existing anti-money laundering laws.
is a major source of revenue, but it is also one of the least regulated industries. The new program could help formalize the sector, increase government revenue, and reduce illegal exports. However, without strong systems for tracking and monitoring, the plan could fail to achieve its goals and attract international criticism.
