Commentary

Is the mining industry the biggest casino in Uganda?

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By Bwesigye D. Binyina

Posted  Wednesday, January 29  2014 at  02:00
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Uganda is no doubt one of the richest African countries. From agriculture, fisheries, forestry, oil and gas, renewable energy to the mining industries, our natural resource endowment has been widely documented since colonial times. But since the departure of our colonial masters in the 1960s, the mineral sector has been the worst performing economic sector and least contributor to our GDP, posting a trifling average of less than 0.05 per cent in the last 10 years according to statistics from UBOS. More embarrassing, however, is the reported Shs5 million and Shs3.5 million reportedly collected from sale of 4.3kg and 3.5kg of gold in the 2012 and 2013 respectively, while more than 1,000kg of gold nuggets is smuggled out of the country in broad daylight tax-free.

Our mineral industry still remains one of the most unexploited and under-regulated within the East African region. Small to medium mines were operated from 1930s – 1960s. A combination of oolitical turmoil and a fall in global mineral prices in the 1970s culminated into an exodus of skilled manpower out of the country and a wane in foreign direct investment in the country’s promising mineral industry.

The mining industry has been relatively dormant in the last 27 years of relative political and economic stability, but recent international price trajectories spurred by the emergency of strong economies in China and India have brought renewed interest in Africa’s diverse mining industry. Key mineral resources in Uganda include Copper, Iron Ore, gold, phosphates, tungsten, tin, berly, tantalum, niobium, phosphates and limestone. Before Uganda’s Independence, mining alone contributed to more than 30 per cent of the country’s foreign exchange earnings.

So where is the problem? Our investigation attributes the current underperformance of the industry to several factors: an archaic policy and regulatory framework (Mining Policy, 2001, Mining Act, 2003 and Mining Regulations, 2004), understaffing and underfunding of the Geological Surveys and Mines Department of the Ministry of Energy and Mineral Development, mineral smuggling, mining speculators, policy frippery, weak revenue monitoring framework, poor resource exploitation infrastructure, lack of good governance and accountability in the sector.

Credit must be given to the Geological Surveys and Mines Department charged with setting up a modern cadastral system, collecting, collating, processing, analysing, archiving and disseminating geosciences data. However, challenges still remain in monitoring and enforcing regulations as well as maintaining professionals capable of generating and utilising available geosciences data.
The sector has also been flooded by international gamblers pausing as mining investors conniving with local speculators. They have exploited the weak regulatory framework to secure several prospecting and exploration licences, which they use to engage in illegal mining and smuggling of minerals out of the country without paying any taxes and royalties. This is worsened by the fact that the whole country has less than five mine inspectors who are expected to inspect more than 800 mining licences and concessions spread throughout the country.

More than 95 per cent of artisanal small scale miners are unlicensed. Local governments lack byelaws to levy royalties from mining activities, which could supplement sustainable regional socio-economic development initiatives. With the mining industry currently employing more than 200,000 Ugandans in artisanal and small scale mining, the industry has the potential to ease the unemployment problem in the country.

I submit that, the mining and hydrocarbon industries jointly have the potential to raise more than 20 per cent of our national GDP. I call upon all local and international stakeholders, domestic and international mining investment companies to extend the same ideals expended on the Oil and Gas industry in the last seven years to the mining industry. The rewards will not disappoint.

Mr Binyina is Energy & Mineral lecturer at Victoria University and Executive Director, Africa Centre for Energy & Mineral Policy. donbb@acemp.org