Bank of Uganda has made its first public announcement on its plan to buy gold from the local market, a move that is set to introduce the most credible client for artisanal miners in Uganda.
According to the State of the Economy for June 2024, a report that Bank of Uganda released on July 10, the central bank noted that it had decided to buy gold from the local market to beef up its foreign reserves.
The BOU, in consultation with relevant key stake holders, has initiated a Domestic Gold Purchase Program with the objectives of building the country’s reserves and minimizing risks on reserves investments. the report notes.
The report added: “The gold purchase program will help in accumulating foreign currency reserves and address the associated risks in the international financial markets.”
This will not be the first time that Bank of Uganda will buy gold from the local market. More than 30 years ago, just before the liberalisation of Uganda’s economy, Bank of Uganda had a small desk within its operational structure that purchased gold from the public. At the time, a statutory instrument gave Bank of Uganda the authority to be the only buyer of gold in the country. The instrument went as far as empowering the Bank of Uganda to fix gold prices.
That is no longer the case. The gold desk was disbanded, and Uganda now runs a liberalised economy that allows the market to set prices at free will. The decision by the central bank to buy gold from the local market is set to offer more credibility to an industry that has struggled to shake off the public suspicion of the trades in the sector.
