Published on 03/01/2025
Bank of Uganda (BoU) has tightened regulations on local gold purchases to ensure a transparent acquisition process. This move strengthens efforts to build foreign reserves, manage risks and reduce dependence on conventional currencies. By securing gold’s integrity, Central Bank aims to strengthen economic stability.
In a presentation to Parliament’s Committee of Commissions, Statutory Authorities, and State Enterprises (COSASE), BoU outlined the guidelines, which emphasize direct sourcing from artisanal, small, medium, and large-scale miners. This approach aims to ensure traceability and authenticity, avoiding the inclusion of gold from other nations. A pre-qualification process will also be instituted for gold suppliers and refineries to meet quality and purity standards.

BoU’s Deputy Governor, Michael Atingi-Ego, highlighted the significance of gold as a stable asset during global economic instability. “Gold’s liquidity, safety, and historical performance as a store of value make it a vital reserve asset. By diversifying Uganda’s reserves, we enhance financial resilience,” he said.

As part of the program, purchased gold will be processed into monetary gold and securely stored with custodians. The Central Bank’s annual report for 2023 revealed that Uganda’s foreign reserves stood at $4.07 billion, a slight decline from $4.08 billion in 2022, providing 4.15 months of import cover. BoU views gold acquisition as a means to mitigate declining foreign currency reserves and support artisanal miners, contributing to socioeconomic transformation.
However, these efforts come amid scrutiny of BoU’s financial practices. During discussions on the Central Bank’s FY2023/24 Auditor General report, COSASE raised concerns about escalating expenses, including UGX 603 billion spent during the fiscal year. Financial and professional charges surged from UGX 26 billion to UGX 55.6 billion, driven by litigation costs and legal damages amounting to UGX 31 billion.
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The committee also noted a rise in administrative costs, including software maintenance, board fees, and property insurance. For example, software expenses increased from UGX 12.5 billion to UGX 18.3 billion, while repairs to furniture and equipment rose to UGX 4.7 billion. MPs demanded a sustainability plan for these expenditures.
Deputy Governor Atingi-Ego defended the spending, citing major upgrades to the Central Bank’s security and fire detection systems and corporate contributions to health centers in Katakwi, Hoima, and Lira districts. He further justified the revaluation of BoU properties, which inflated insurance costs, and additional software licensing to enhance the Bank’s technological infrastructure.
The gold purchase program aligns with Uganda’s long-term goal of leveraging its vast mineral wealth, estimated at 31 million metric tons of gold deposits, including 320,158 metric tons of refined gold worth $12.8 trillion. This initiative is also expected to reduce the trade and current account deficits by cutting raw gold imports and bolstering domestic value addition.
Despite BoU’s ambitious plans, questions linger over its financial management, particularly the UGX 8.6 trillion loan owed by the government, which has been delayed due to the economic impact of COVID-19. BoU assured Parliament that measures, including a Service Level Agreement with the Ministry of Finance, are in place to address repayment and prevent fiscal dominance.
Globally, central banks are increasing gold reserves to hedge against inflation and economic instability. Uganda’s program mirrors efforts by emerging economies like Russia, China, and India to boost their gold holdings.
The Bank of Uganda’s dual focus on enhancing reserves and addressing fiscal challenges reflects its commitment to stabilizing the economy while ensuring accountability and sustainability in its operations.