Uganda’s central bank begins buying gold directly from local miners to build foreign reserves

Tue Apr 21 2026

The Bank of Uganda has launched a domestic gold purchase programme, buying directly from artisanal miners and refiners at international spot prices to diversify its foreign exchange reserves and curb illicit trade.

Uganda’s central bank moved on Sunday to position itself as an active buyer in the country’s gold market, operationalizing a programme that could quietly reshape how one of East Africa’s most resource-rich economies manages its monetary foundations. The Bank of Uganda’s Domestic Gold Purchase Programme, announced April 20, signals a deliberate pivot away from dollar dependency at a moment when global currency volatility has made that reliance increasingly costly.

Governor Michael Atingi-Ego’s institution will purchase gold from licensed artisanal and small-scale miners, as well as large-scale refiners, at unsubsidized international spot prices. The decision to peg purchases to market rates rather than offer a discount is notable: it tells miners the programme is built for sustainability, not a short-term policy gesture. A VAT exemption and the removal of associated levies sweeten the deal further, making the official channel genuinely competitive with the informal networks that have historically siphoned a significant share of Uganda’s output abroad.

That informal leakage is a core problem the programme is designed to address. Uganda’s official gold production, concentrated in the Karamoja region and scattered small-scale operations, has been assessed at roughly 10 to 15 tonnes annually. But those figures have long been understood to undercount actual output substantially, with unmonitored trade estimated considerably higher. By offering market-rate pricing and a tax-free structure, Kampala is essentially making smuggling less financially rational, nudging miners toward the banking system without coercion.

The macroeconomic logic here runs deeper than just adding a line item to the central bank’s balance sheet. Every tonne of gold absorbed into official reserves is a unit of insurance against dollar volatility. Uganda imports significant volumes of fuel, medicines, and manufactured goods priced in dollars, meaning a weakening shilling transmits directly into consumer prices. Stronger reserve buffers, diversified away from a single foreign currency, give the BoU more room to defend the Ugandan shilling during external shocks without burning through dollar holdings at an accelerated pace.

The move also arrives in a broader context that makes it tactically well-timed. Central banks globally have been accumulating gold at record or near-record pace for three consecutive years, driven partly by sanctions risk following Russia’s reserve freeze in 2022 and partly by a secular reassessment of what constitutes a safe reserve asset. Uganda joining that trend as a producer nation rather than a pure buyer carries its own logic: the country is not paying a premium to acquire an asset it already mines domestically.

For the artisanal mining sector, the programme’s success will depend heavily on operational execution. ASMs typically operate with thin margins and limited access to formal financial infrastructure. If the BoU’s procurement process involves bureaucratic friction, delayed payments, or geographic inaccessibility, miners will continue defaulting to intermediaries who offer speed over price. The VAT exemption is a strong structural incentive, but trust in government purchasing programmes in the region has historically been earned slowly.

Watch whether neighbouring gold-producing nations take note. Tanzania, the Democratic Republic of Congo, and Zimbabwe have all grappled with the same tension between formal and informal gold flows. Uganda moving early with a well-structured domestic purchase mechanism could pressure regional peers to respond, or alternatively, drive smuggling routes to shift toward borders where official competition is weaker. Either way, what the Bank of Uganda launches this week is less a domestic policy footnote and more a test case for how frontier market central banks can leverage mineral wealth in an era when the dollar’s reserve dominance faces its most sustained challenge in decades.

Source: https://startupfortune.com/