The Bank of Uganda has officially commenced the purchase of gold from domestic artisanal and small-scale miners to diversify its foreign exchange reserves and support the local mining economy.
This move marks the operational phase of a strategic bullion-buying programme announced two years ago, aimed at incorporating physical gold as a core component of the country’s sovereign assets.
The central bank confirmed on Tuesday that it successfully executed its first transaction under the initiative, following extensive preparations to establish the necessary infrastructure for refining and storage.
The programme targets the acquisition of locally sourced gold to mitigate risks associated with international currency volatility and to reduce the nation’s long-term reliance on foreign denominated reserves.
By acting as a primary off-taker, the Bank of Uganda intends to provide a reliable market for domestic producers while curbing the illicit smuggling of the precious metal across borders.
Officials stated that the bullion will be refined to international standards before being integrated into the national reserve portfolio, providing a financial buffer during periods of global economic uncertainty.
The initiative aligns Uganda with several other African nations that have recently turned to gold-buying schemes to strengthen their balance sheets and provide stability for their domestic currencies.
While the specific volume of the initial purchase was not disclosed, the bank indicated that the programme will scale gradually as more local producers meet the required regulatory benchmarks.
Economists suggest that the move could improve the country’s creditworthiness and provide the central bank with more flexibility in managing the Ugandan shilling’s performance against the US dollar.
The program also includes measures to formalize the artisanal mining sector, ensuring that environmental and social governance standards are met during the extraction and refining processes.
