Uganda's Flourishing Gold Industry Paves the Way for Economic Growth
By Obadia Ismail
The glittering golden trade industry in Uganda has once again taken centre stage, reclaiming its position as the country's top export commodity. Recent reports released by Uganda's Ministry of Finance confirm that the gold trade has surged, propelling it to the forefront of Uganda's export portfolio.
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In a remarkable comeback, gold trade contributed a remarkable 37% to Uganda's export revenues in the past year leading up to February, a significant feat that underscores the sector's vital role in the country's economic landscape.
Previously, gold held a commanding presence in Uganda's export earnings, accounting for over 44% of the total revenue. However, challenges related to taxation impeded the sector's growth and dampened its economic impact. A tumultuous period ensued, lasting over a year, as tax disputes plagued the industry and hindered its potential.
As early as May 2023, the Ugandan Parliamentary Committee on Finance, Planning, and Economic Development highlighted the substantial losses incurred by the country due to unresolved tax disputes with gold exporters and refiners. Approximately $160.77 million in uncollected taxes from the export of gold goods had slipped through Uganda's grasp since July 2021, casting a shadow on the industry's prospects.
In response to these challenges, Ruth Nankabirwa, Uganda's Minister for Energy and Mineral Development, acknowledged the setbacks arising from the dispute between the Uganda Revenue Authority and more than 20 gold exporters and refiners. Despite these obstacles, recent indicators suggest a promising resurgence in Uganda's gold trade, with reports indicating a monthly revenue exceeding $228.4 million over the twelve months leading up to February.
Noteworthy to mention is that during this period, the gold trade contributed a substantial 37% to Uganda's total export income, amounting to a robust $2.7 billion out of the $7.4 billion overall export earnings, firmly establishing it as the leading export commodity in the East African region.
Key Insights:
The revenue statistics highlight that approximately 45,988 kilograms of gold were sold during the fiscal year, averaging around 3,538 kilograms per month.
Uganda's gold finds a significant market in the Middle East, primarily the United Arab Emirates, which accounts for around 98% of Uganda's gold imports.
In addition to the resurgence of the gold trade, Uganda's tourism sector also plays a pivotal role in driving revenue and bolstering the country's economic stability.
Leveraging Uganda's Gold Advantage for Sustainable Development:
To capitalize on the resurgence of the gold industry, Uganda must focus on resolving taxation disputes and instituting transparent frameworks that facilitate fair trade practices. Strengthening partnerships with key stakeholders, enhancing regulatory oversight, and fostering a conducive business environment will be crucial in sustaining the growth momentum of the gold trade.
Furthermore, investing in local capacity building, sustainable mining practices, and value-addition initiatives can unlock the full potential of Uganda's gold sector, creating employment opportunities, boosting local economies, and driving inclusive growth.
By harnessing its rich gold resources responsibly and strategically, Uganda has the potential to not only bolster its economic prospects but also carve a path towards sustainable development and prosperity for its citizens.
The Author is a Corporate and Commercial Lawyer
