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‘Gold Reserves Will Boost Uganda’s Economy,’ African Gold Refinery Boss Says

Sharon Tem, the acting chief executive officer of African Gold Refinery (AGR)

Uganda’s aspirations to become an industrialized economy can be hugely boosted through bullion banking, Sharon Tem, the acting chief executive officer of African Gold Refinery (AGR), has said.

Speaking at the recent Mineral Wealth Conference organized by the Uganda Chamber of Mines and Petroleum, Tem said manufacturers could hedge upon gold instead of land or machinery, to get bank loans for industrialization.

Bullion banking though would require sizeable gold reserves at the Central Bank; a development that is still far from being realized in Uganda.

AGR has a production capacity of 600kg a day but can only realize one tonne for an entire month due to limited supplies of gold ore. The refined gold is however all exported, since the Uganda market is not sufficient enough to consume it.

“If government can embrace metal banking; if the central banking can absorb and back up metal banking and introduce it across the commercial banks, even as a reserve asset, we will not need to export gold. We need to have the capacity to absorb the gold that the refinery is producing daily,” Tem said.

The Bank of Uganda backs up its currency with foreign exchange reserves, largely in United States dollars. Like gold, the dollar is said to be a safe haven during times of financial stress.

If Uganda is to build its gold reserves, Tem advised, the country most importantly needed to carry out the exploration, the mining and the refining of the gold by itself; without a reliance on foreign help.

Globally, central banks hold gold reserves as a means of backing their currencies. In simple terms, gold reserves are held as a security to pay depositors. A country with high gold reserves boosts investor confidence in the market, which, ultimately, leads to more business decisions made.

“President Museveni has always supported AGR, but we need to take it forward and have the necessary legislation in place and then we can absorb this gold,” Tem said.

Tanzania is expected to be the first East African country to lead the way in building its own gold reserves. The country is nearing completion of its gold refinery, from which it is expected to produce gold reserves for its central bank.  

Nicholas Woods, a lawyer and representative of AGR, said there was a need to fight the exportation of raw gold.

“Most of the refineries are exporting raw gold, on airline seats, which is really unfortunate. The gold sector is managed by international standards. There are standards like those in the London bullion market, and also guidelines from the Dubai sector,” he said.

Were all the licensed refineries in Uganda to follow these standards, and stopped smuggling raw gold, the country would even earn more from its exports, he added.

AGR has been one of the main sponsors of the Mineral Wealth Conference since 2015. Because of Covid19 restrictions, this year’s summit was a Webinar that was also aired live on TV.

The UCMP is leading a campaign dubbed 90 Days of Oil and Mining to showcase the various opportunities in the sectors. It started on August 26, 2020 and will end on November 26, 2020.

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