The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | The Ministry of Energy has come up with new measures to regulate the exportation and sale of gold. The measure announced by the Ministry permanent Secretary, Irene Batebe follow growing concerns about discrepancies between gold mined in Uganda and that exported mainly to the United Arab Emirates
Regional and international reports have recently indicated that Uganda has not been strict in enforcing the International Conference on the Great Lakes Region (ICGLR) rules against illicit gold from DRC and other neighboring countries. Illicitly traded gold has been blamed for some of the worst conflicts in the Great Lakes region.
According to a statement issued by Batebe, trading in gold should be conducted between parties that hold valid mineral dealer’s license for precious minerals, mining licenses for gold or refining licenses for gold.
The new regulations according to sources follow consultations with Uganda Revenue Authority’s Customs department and the Directorate of Geological Surveys and Mines (DGSM).
DGSM and URA hold different mandates in the regulation of gold for export. The two bodies have been reporting different figures about the amount of gold produced from Uganda. The gold sector is critical to the economies and communities of many sub-Saharan African countries. Gold is now Uganda’s main export earner.
Figures show that Uganda exported gold worth more than $2 billion in 2022. In mid-August 2022, the Central Bank of Uganda will start purchasing locally-produced gold.
The move was according the Bank aimed at supporting its foreign reserves and to address associated risks in the international financial markets. Apart from measures to accumulate international reserves, the Bank of Uganda said the importation of raw gold was expected to reduce, contributing to the reduction in total imports.
“By purchasing gold directly from the artisanal miners, BOU will also be supporting the livelihoods of artisanal and small-scale miners. It also aims at mitigating the declining foreign currency reserves and addressing the associated risks in the international financial markets” said a statement.
It has however emerged that gold produced by artisan miners in Uganda is normally grossly under declared and therefore denying the government needed revenue.
The sector has reportedly been dogged by illicit gold buyers who tend to sell the gold directly to the refineries in the country.
There are at least five gold refineries in Uganda today, most of which were licensed by URA under Manufacture Under Bond warehouse license.
Some of the gold refineries include; African Gold Refinery, Simba Gold Refinery and Bullion Gold Refinery Leaders in gold mining districts have however voiced concerns about the decision to waive royalties on gold mined by artisans and small-scale miners.
They said the moved has denied the local governments source of revenue despite the social and environmental concerns related to artisanal gold mining.
The government recently imposed a $200 export tax on each kilogram of god exported. It also waived royalties on gold produced in the country. Whoever intends to e import gold must possess an importation permit charged at $270 as per the mining and mineral (licensing) regulations 2023.
Where minerals are not from Uganda, an export permit or any other related documents issued by relevant government department is required. One has also to prove payment of royalties from the country of origin.
According to Batebe, import permit will only be granted per consignment. For exporters, there should be proof that the gold has been refined to purity level of 99.9% and proof of payment of $200 through URA.
An investigation by Swiss organization SwissAid in May said Uganda remains one of the hotbeds for smuggled in Africa according to. The organization said that most contraband gold from DRC is smuggled through Uganda and Rwanda.
As part of the efforts to fight the smuggling of gold from the Great Lakes, Uganda in May 2024 attained the Regional Certification Mechanism. It is a compulsory regional standard for certification of the 3Ts (tin, tantalum, tungsten) and gold sourced from or transiting across an ICGLR Member State.
Uganda was the 5th country among the 12 to attain the certificate after ratifying the protocol on the fight against illegal exploitation of natural resources in the region. It followed DRC, Rwanda, Burundi, and Tanzania.
The ICGLR is part of the implementation of the pact on security, stability, and development as enshrined in the Great Lakes Region Act 11 of 2018 to prevent illegal exploitation of and illicit trade of designated minerals.
Reports have indicated that at its most basic level, the smuggling of Artisan Mined deprives governments of the region of tax revenue – up to $22 million per year – desperately needed for development.
One report said beyond the financial loss, the inability of IGGLR governments to control, tax and financially benefit from their ASM gold sectors has served to distort governance of the mineral sector in the ICGLR region.
The study identified two kinds of contraband gold trade: in-region cross-border traffic and out-region smuggling. In-region cross-border traffic involves the illegal transport of gold across national boundaries within the ICGLR region, where gold sourced in once country is transported to a second country and then “legally” exported as if it had been sourced in the second country.
Out-region smuggling is the illegal export of gold (i.e. without obtaining export permits or paying export royalties1) from one of the countries of the ICGLR region to an outside destination such as Dubai
The U.S. Departments of State, the Treasury, Commerce, Homeland Security, Labor, and the United States Agency for International Development (USAID) in May issued and advisory in light of increasingly concerning reporting related to the role of illicit actors in the gold trade, including the Wagner Group.
It said without adequate due diligence and appropriate mitigating measures, an industry participant may inadvertently contribute to one or more of these risks, including conflict and terror financing, money laundering activities, sanctions evasion, human rights and labor rights abuses and environmental degradation.
“U.S. individuals and entities engaged with the gold sector—whether as miners, traders, refiners, exporters, users, consumers, financial institutions, or otherwise—should carefully review the risks described in this Advisory and ensure they conduct enhanced due diligence to address these risks, as appropriate and necessary” reads part of the statement.
“Individuals and entities engaged in the gold sector across the continent in countries or localities where corruption may be a concern should be aware of the risks associated with smuggling, including potentially facilitating the violation of economic sanctions, tax evasion, money laundering or other financial crimes related to smuggling” it said.
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