What you need to know:
We must stop moving around with a begging bowl for our survival and that of the future generation.
The recent discovery of huge gold reserves in Uganda has attracted massive attention in major international financial capitals.
It is estimated that the country has about 31 million metric tonnes of gold ore reserves, which is expected to yield 320,158 metric tonnes of refined gold worth $13 trillion. This discovery has the potential to give the country a positive trajectory to economic development.
Today, gold has become our number one export, accounting for 44 percent of our export earnings as per Bank of Uganda. However, it is important to note that not all the gold we export is mined in Uganda. Some of this is imported.
According to the Uganda Revenue Authority (URA), Uganda imported gold worth $202.3m from Zimbabwe, $4.3m from the Democratic Republic of Congo and $2.73 from Tanzania. In fact, out of the $1.14b gold exports in 2019, only a fraction was locally mined as per the Directorate of Geological Survey and Mines (DGSM).
This singular gold potential of $13 trillion dwarfs that of the $100b of oil reserves in the Albertine Graben in Bunyoro. If other mines are taken into consideration, gold will downplay oil.
These glossy figures give hope of a brighter economic landscape for the country. However, the extractive industry in reality has bumps that we must overcome if these potential benefits are to be realised. Conspicuously, mining areas like Mubende, Busia, Buhweju and Karamoja that have huge gold reserves do not reflect this on the living standards of the locals.
This curse is ripe in most, especially African mineral rich countries like DRC, Guinea, Mali, Sierra Leone, among others. As such, how does Uganda avoid this negative impact? How do we ensure our gold benefits the wananchi?
One of the ways is by ensuring the health of those directly involved in the extraction and processing of the precious metal is protected by not exposing them to hazardous chemicals like mercury and cyanide. All miners irrespective of whether artisanal or industrial, must wear protective gear at all times.
The proposed Uganda National Mining Company that will aim to take equity stakes of up to 15 percent of all medium and large scale mining operations in the country, must keep an eye on the declared numbers. It should not be hoodwinked into accepting only declared gold quantities.
We must also ensure there is value-addition to our gold before it is exported. This can be through gold coins and other products. This process alone can increase the value of gold by two-fold.
Uganda must also start building most of her foreign reserves in gold. The tendency of holding our reserves in treasury bills, government bonds, corporate bonds and equities dangerously exposes our currency and economy to global economic shocks. Gold remains a commodity with fairly inelastic supply, thereby holding its value well.
The DGSM should gazette areas with gold reserves and publish their ownership to establish if indeed they are productive. Concessions that aren’t being exploited should be reallocated to financially capable individuals and companies. After 61 years of independence, we should be self-reliant as a country. We must stop moving around with a begging bowl for our survival and that of the future generation.
Mr Martin Drito Andi is former MP, Madi-Okollo and founder member, National Confederation of Diamond Miners. Association of Guinea.