Prime
Govt bans export of unrefined gold
Gold, according to Bank of Uganda data, gold is Uganda’s largest export, contributing 44 percent of total export volume. Photo | file
What you need to know:
The Mining and Minerals (Amendment) Bill, 2021, which is before the President, according Ministry of Finance, if signed into law will ban export of unrefined gold and will also introduce a standardised levy for all gold exports
The Ministry of Finance has said there will be no more export of unrefined gold after President Museveni has accented to the Mining and Minerals Bill, 2021.
While responding to Monitor's inquiries about the progress of negotiations between government and gold dealers to put in place a standard levy for gold exports, Mr Moses Kaggwa, the Ministry of Finance acting director economic affairs, said many of government’s proposals are contained in the Mining and Minerals Bill, 2021, which has not yet been signed into law.
However, he noted, the Bill, if signed into law will ban export of unrefined gold and introduce a standardised levy or charge for all gold exports.
“Yes there will be no export of unrefined gold. It [Bill] institutes a ban on export of unprocessed gold. We are waiting for the President to accent to the Bill after which we shall do regulations to implement the new law,” he said, noting that government would consult with all stakeholder to put in place a standard levy under which gold exports would be governed.
Government, according to sources familiar with the matter, who asked to stay anonymous because they are not authorised to speak about it, is likely to consider a standard rate for all gold exporters, which would introduce a surcharge of $100 (Shs381,178) or 5 percent levy of the value of every kilogramme of exported gold.
In April last year, government had proposed a surcharge of $200 (Shs762,356) for every kilogramme of exported gold, which was later implemented in July last year.
However, this prompted gold dealers to suspend the export of the precious stones, citing introduction of an inconsiderate charge that would see them counting losses.
Government subsequently engaged gold dealers, before conceding to demands, among which included modifying the levy.
In the August 2021 Ministry of Finance Economic Performance report, Finance Minister Matia Kasaija indicated that gold dealers had suspended exports due to tax-related challenges.
However, he said, government had taken note of the concerns and had embarked on reviewing the problematic tax regime.
The impasse saw Uganda experience a sharp decline in export receipts, which by December 2021, according to Bank of Uganda, had dropped to $324m (Shs1.1 trillion) from $455m (Shs1.6 trillion) in June last year.
The law was subsequently amended introducing a ban on the export of unprocessed gold, which according to Mr Kaggwa, was prompted by the growth of Uganda’s gold refining industry.
Uganda currently has five gold refineries including African Gold Refinery, Simba Gold Refinery, Bullion Refinery, Metal Testing and Smelting and Aurnish Trading.
Two new companies including Nuran Ventures-SMC and Wagagai are in the process of setting up refineries to conduct both mining and gold processing.
Gold had by June last year become Uganda’s largest export, contributing at least 44 per cent of the country’s export volume.
Dr Adam Mugume, the Bank of Uganda director for research, in told Daily Monitor than that export receipts had been affected by the failure to register gold exports due to a tax-related dispute between government and dealers.
Secretive
Gold trading in Uganda is highly secretive. Apart from export volumes, little is known about the commodity. However, some experts have indicated much of Uganda’s gold is sourced from regional neighbours.
Unrefined gold imports from both Tanzania and Zimbabwe have pushed the two countries into becoming some of Uganda’s largest trade partners, according to Bank of Uganda.
For the first time in years, trade between Uganda, Tanzania and Zimbabwe has been standing out with Uganda’s imports from Tanzania doubling between April and June last year. In June, Uganda imported goods worth $125.12m (Shs444b) from Tanzania, which indicated a 43 per cent increase from $70.07m.
