How the gold rush and raw material curse contributes to arrested economic growth

Author: Karoli Ssemogerere. PHOTO/FILE

What you need to know:

  • "Is Uganda’s fate being a producer of raw materials and cheap labour and nothing else?”

Visitors to Kampala will not be surprised that just a quarter century after foreign powers invaded the DRC, an action for which the International Court of Justice found Uganda liable and ordered $325 million in reparations has become a major transit and clearing center for semi-refined and refined gold.
Gold in Uganda is no longer contraband, it is neck and neck with coffee as Uganda’s most important export reporting more than $500 million in export receipts. 

There are multiple transit lines for gold. One is the traditional- Bukavu and the hinterland and West Nile. Areas like Arua have moved on completely from tobacco once the region’s economic mainstay to commerce and business. That gold has big and small players, who sometimes jump on the bus and travel with gold. Second is South Sudan. Declared gold moves freely from Juba to Kampala for re-export or further processing in Kampala. South Sudan documents its exports.

Last year reports indicated that more gold was pouring into Kampala from Zimbabwe, mineral rich for reprocessing and also partly to avoid sanctions on members of the Zimbabwe elite. 
Fourth are the small jua kali gold mining concessions licensed by the Ministry of Energy and Mineral Development in Uganda’s gold belt that stretches from Mitooma District onto the Ibana plateau to Kabarole, Kiboga and Mubende. 
In 2022, Ebola broke out in Bukuya District at the epicentre of the gold rush. 

First indications mistakenly thought Ebola had crossed the border from the DRC, where gold is just a small element of the picture.  The DRC is the region’s mineral Christmas tree; cobalt, lithium, diamonds all flow from here with varying interests. The United States’ Centers for Disease Protection is fully invested in detecting and preventing disease outbreaks.

 It turned out that the Ebola outbreak was from Sudanese gold diggers in Bukuya, close to larger centers, but carrying a mutation of Ebola last seen in Northern Uganda in the early 2000s. The epidemic industry, flush with cash from Covid-19 lost a chance to replenish their reserves.

If you fly Ethiopian Airlines out of Entebbe, chances are many passengers are continuing on to countries where gold is even a bigger business. Nigerians, Malians and other West Africans all connect through Addis Ababa’s International Airport to continental destinations. 

Ethiopian Airlines [recently joined by Kenya Airways] is one of the few African carriers that fly to the United States. It is interesting that half the plane empties in Lome, Togo, the headquarters of Ecobank before disappearing to other destinations.  Flying Ethiopian is not cheap either. Her transcontinental fares are higher than European carriers like SN Brussels or even British Airways. The competitive advantage is time conscious travelers who feel they are wasting time flying into Europe to connect to their final destinations the old “colonial” way.

The mineral rush has so many other features. Image conscious East Asians; Japanese, Koreans. The West Africans know the real stuff from the contraband and other intermediaries mediate the gold trade. 
In their plans for Uganda, the British Governor, Sir Harry Johnstone, dictated we were to be a source of raw materials. Industrialisation was to be very light, not to distort the overall objective. 

In 1930, members of the Ugandan Syndicate in Edinburgh, Scotland, wrote to the then Governor interested in a monopoly to process bark cloth, a high value textile produced in Buganda. They were stunned by a non-response, a glaring disclosure in Lwanga Lunyiigo’s book, Uganda, an Indian Colony 1890-1972. So was the disappearance of skills on the waters of Lake Victoria. Whereas Buganda had a Navy in 1880 using sails, on Lake Victoria, all this industry had completely disappeared within a few years of colonial rule.

As we celebrate coffee’s return to the citadel of exports, we all have fresh memories of the Pinetti black “gold” robusta coffee concession written on the same script, Uganda’s rulers have had to deal with, “How do I get it all?”  
Obote, Museveni and probably their successors are still scratching their heads for generations; Is Uganda’s fate being a producer of raw materials and cheap labour and nothing else?

 Mr Ssemogerere is an Attorney-At-Law and an Advocate. [email protected]