Gold export resumes
What you need to know:
- Dealers, in July last year, suspended export of gold over what they termed as an unfair tax regime.
Gold exports returned for the first time in over 12 months, according to Bank of Uganda.
In its October report detailing composition and the value of exports, Bank of Uganda indicated that gold exports resumed during August, returning a 32 percent growth in export receipts, which had declined for more than a year.
During the month, the report indicates, gold exports fetched earnings worth $174m (Shs669.9b), coming on more than 12 months of suspended activity.
Uganda, the Bank of Uganda report shows, last exported gold in June 2021, from which earnings worth $165.9 were recorded.
On average, Uganda exports gold worth $172.2m, making the commodity the country’s most valuable export.
Before the suspension, gold had been Uganda’s largest single export contributing at least 44 percent of total export earnings.
However, in July 2021 dealers and exporters suspended export of the commodity, citing an unfair tax regime.
In April last year, government had proposed a charge of $200 (Shs762,356) for every kilogramme of exported gold, which was later implemented in July last year.
However, this prompted gold dealers to suspend the export of the precious stones, citing introduction of an inconsiderate charge that would leave them counting losses.
Gold had by June last year become Uganda’s largest export, contributing at least 44 per cent of the country’s export volume.
Dr Adam Mugume, the Bank of Uganda director for research, during a discussions, told Monitor that export receipts had been affected by failure to register gold exports due to a tax-related dispute between government and dealers.
Realising the loss, government subsequently engaged gold dealers, before conceding to demands, among which included modifying the levy.
Last month, in an interview sources in government, who had asked anonymity because they are not authorised to speak about the matter, said a standard rate had been proposed for all gold exporters, which would introduce a charge of $100 (Shs381,178) or a 5 percent levy of the value of every kilogramme of exported gold.
In the same proposals, government banned export of unrefined gold.
Uganda exports much of its gold to the Middle East with United Arab Emirates being the most preferred destination.
At least 96.01 percent of Uganda’s exports to the Middle East are composed of gold, according to data from Uganda Bureau of Statistics.
The rapid growth in Uganda’s gold exports was first noticed between December 2015 and November 2016 when the country earned $365.2m (Shs1.3 trillion) from the commodity.
Gold exports have grown from an average of 10,679 kilogrammes in 2015 to more than 34,450 kilogrammes in 2020 , according to Bank of Uganda data.
Gold is expected to see a rebound in export earnings, which in August, Bank of Uganda indicated, fetched $507.4m (Shs1.95 trillion), up from $343m (Shs1.3trillion) in July.
Performance of other exports
During August, other commodities such as sugar, metal and cemented also support the growth in export earnings.
Sugar, which had suffered supply challenges, recorded a 39 percent increase, fetching $20m (Shs77b) worth of earnings, up from $12.2m (Shs46b) in June while earnings from metal exports grew to $18.3m up from $14.8m.
The other commodities that realised a significant increase included vanilla, which registered $5.1m in August down from $1.5m, while cement earned $7.7m from $6.1m in July.
Maize realised $11m up from $7.2m while fruits and vegetables increased to $6.8m up from $3.1m in July.