In 2022, the Ugandan government announced that around 31 million metric tons of gold ore had been discovered in different parts of the country. From this, it is estimated that about 320,000 metric tons of refined gold could be extracted. The market value of this gold is estimated to be around $12.8 trillion.
Discovery Areas and Mining Activities
The largest gold reserve was found in the northeastern Karamoja region of Uganda. In addition, significant gold mines have been identified in the districts of Busia, Mubende, Namayingo, and Zombo.
Chinese company Wagagai Gold Mining Company has invested about $200 million to build a gold mine and refinery in Busia. The company aims to refine about 5,000 kilograms of gold per day.
Economic Impact and Export Revenue
After the gold discovery, Uganda's export earnings saw a significant increase. In June 2024, gold exports earned $3.09 billion, compared to $1.13 billion in June 2023.
The main destinations for Uganda's gold exports are the United Arab Emirates, India, and Hong Kong. This export income has helped grow Uganda’s foreign currency reserves and played a key role in stabilizing the economy.
Control and Transparency Challenges
With the rapid growth of the gold sector, there have been concerns about control and transparency. The Uganda Gold Export Industry Transparency Initiative (UGEITI) reported inconsistencies in gold production and export data. For example, in the 2021/22 financial year, the Uganda Revenue Authority (URA) recorded gold export revenue of 6.3 trillion shillings, while one refinery reported importing only 1.3 billion shillings’ worth of gold.
Such discrepancies have made tax collection difficult, and the government has lost significant revenue. The Auditor General's 2022 report stated that 340 billion shillings in taxes from gold exports were not collected.
New Laws and Policies
The Ugandan government has introduced a new mining and mineral law to improve control and transparency in the mining sector. The law proposes the creation of a state-owned mining company, which will hold 15% free equity in large and medium-scale mining projects and will have the right to buy an additional 20% at market rates.
However, implementing this law may cause about 20,000 informal mine workers to lose their jobs, which could create social and economic challenges.
International Reactions and Doubts
Following Uganda's gold discovery announcement, the international community had mixed reactions. Experts noted that around 244,000 metric tons of gold have been discovered worldwide so far, with 187,000 metric tons already extracted. Therefore, Uganda’s claim of having 320,000 metric tons of refined gold has raised questions about its feasibility.
The global gold market has not shown any major reaction to this discovery, which has led to doubts about the reality of Uganda’s claims.
Conclusion
Uganda's gold discovery has created great economic potential for the country. However, to turn this potential into reality, transparency, control, and good governance must be ensured. The government should involve local communities in the development of the mining sector and consider environmental and social factors.
If managed properly, this discovery could help Uganda become one of Africa's leading gold-rich nations and open a new chapter in its economic development.