New law to regulate construction minerals in offing

As experts call for a special fund and tailored banking products to boost investment in artisanal mining space

Kampala, Uganda | JULIUS BUSINGE | Uganda government has completed the drafting of the Building Substances Bill, which will soon be submitted to the Cabinet for approval, according to Irene Bateebe, the Permanent Secretary in the Ministry of Energy and Mineral Development.

The Bill aims to establish regulatory oversight for the extraction and sale of non-metallic materials—often referred to as development minerals—such as sand, clay, and murram, which are essential for the construction industry.

Historically, these resources fell outside the mineral regulation framework, resulting in environmental degradation and lost revenue opportunities, Bateebe said.

The proposed legislation seeks to bridge this gap by requiring licensing for companies involved in the extraction of these materials and introducing standards to protect the environment while meeting the demands of the construction sector.

Bateebe revealed this development during an event organized by the United Nations Development Programme (UNDP) at Fairway Hotel on Oct.25.

The UNDP Uganda Resident Representative, Nwanne Vwede-Obahor, welcomed the new regulatory initiatives but emphasized the necessity of addressing the financing challenges faced by Uganda’s artisanal and small-scale mining (ASM) enterprises.

The meeting, in collaboration with the Ministry of Energy and Mineral Development and the Uganda Chamber of Mines and Petroleum, showcased a shared commitment to sustainable growth for small-scale miners, who are vital to Uganda’s economic landscape.

Vwede-Obahor underscored the significance of recognizing development minerals—everyday materials like limestone and clay—that constitute 84 percent of global mineral production and are critical for sectors such as construction, agriculture, and manufacturing.

“The sector’s potential to generate jobs and alleviate poverty is key given that the ASM sector employs nearly 400,000 Ugandans and contributes over $350 million annually to the economy,” she said.

Financial difficulties

However, Uganda’s ASM sector grapples with severe financial hurdles. Limited access to traditional banking services, high-interest rates, and insufficient collateral options creates a substantial financing gap.

Vwede-Obahor emphasized the importance of “derisking financing” for these enterprises, advocating for an enabling financial ecosystem that includes tailored products, capacity building for miners, and supportive policies to improve access to finance.

In collaboration with the European Union, UNDP is working to address these challenges through initiatives under the ACP-EU Development Minerals Programme.

This includes training miners in sustainable practices, forming over 100 mining associations, and partnering with financial institutions to develop affordable financing options like credit guarantees and risk-sharing mechanisms.

During the meeting, representatives from various sectors, including the Ministry of Finance and local financial institutions, engaged in discussions on supporting ASM enterprises. Strategies explored included enhancing financial literacy among miners, encouraging regulatory frameworks that facilitate access to credit, and formalizing mining operations to bolster credibility.

Empower miners

Vwede-Obahor urged stakeholders to unite in empowering small-scale miners. This collaboration, she said, is essential for fostering a resilient economy that benefits both the sector and the communities it serves.

In Uganda, the development minerals sector serves as a cornerstone for various economic activities, from construction to agriculture.

The artisanal and small-scale nature of mining means that over 80% of development minerals production relies on labor-intensive practices. However, a recent baseline assessment highlighted significant financing challenges, particularly for women and vulnerable groups within the ASM workforce.

Opportunities for growth lie in accessing low-cost financing tailored to ASM needs. With interest rates often prohibitively high, many operators lack awareness of formal financing options. Their needs range from small machinery costing between $3,000 to $8,000 to operational capital for production.

Humphrey Asiimwe, CEO of the Uganda Chamber of Mines and Petroleum, noted that the sector faces several challenges, including complex regulations, inadequate infrastructure, and environmental concerns.

These issues hinder growth and discourage investment.

He said the government is better positioned to enhance investor support by facilitating financing through government-backed initiatives, offering tax incentives, and streamlining licensing processes. Additionally, capacity-building programs in partnership with organizations like UNDP support the formalization of artisanal miners, while local value addition can create jobs and increase revenue generation.

“Collaborations with financial institutions and sustainable mining initiatives present further opportunities for investment, allowing businesses to leverage green bonds and impact funding for environmentally responsible projects,” Asiimwe said.