Bank of Uganda Launches Gold Purchase Pilot to Boost Reserves and Tackle Illicit Trade

The Bank of Uganda (BOU) has unveiled a pilot program to purchase locally mined gold in a move aimed at diversifying the country’s foreign reserves and curbing rampant illicit trade in the precious mineral.

The initiative, announced this week, comes at a time when Uganda’s gold industry—responsible for 44% of the nation’s total exports—is under pressure from porous borders, weak oversight, and widespread smuggling. According to the Financial Intelligence Authority (FIA), the sector remains highly vulnerable to money laundering due to its reliance on informal, artisanal mining.

“We are only going to buy gold that is mined locally,” said BOU Governor Michael Atingi-Ego. “The chain of traceability is what we are putting in place.”

In April, the central bank issued a tender for a one-year framework arrangement with gold suppliers and refineries, which may be extended. Under the program:

• All gold must be delivered to a domestic refinery selected by the BOU.
• Payments will be made in Ugandan shillings within 30 days of delivery and invoice submission.
• The pilot will run for two to three years before a full-scale rollout is considered.

Officials argue the system will provide a more transparent supply chain, integrating artisanal miners into formal markets while strengthening Uganda’s reserves with an asset of growing global value.

However, industry experts caution that without deeper reforms, the initiative risks falling short of its goals. Bwesigye Binyina, Executive Director of the Africa Centre for Energy and Mineral Policy, noted that most refineries operate on a “know your customer” (KYC) basis, which primarily engages middlemen rather than the miners themselves.

“The actual individuals delivering the gold are typically middlemen, not the miners themselves,” Binyina explained. “This creates a situation where a refiner might produce a tonne of gold, but only a portion can be traced.”

Such gaps, he warned, could leave the central bank vulnerable to international scrutiny, with gold potentially classified as “contaminated” under global traceability standards.

The FIA has also raised concerns about compliance in the sector. Of Uganda’s 77 licensed precious metals dealers, only 34 are registered with the authority. According to Benjamin Wesonga, an anti-money laundering specialist at the FIA, enforcement remains minimal.

“Despite the laws in place, no cases involving precious metals dealers have been prosecuted in court,” Wesonga revealed, highlighting a lack of deterrence against illegal trade.

The central bank’s gold-buying initiative represents both an economic opportunity and a governance challenge. While it could strengthen Uganda’s financial position and integrate artisanal miners into the formal economy, experts stress that without robust regulation and transparency mechanisms, the country risks undermining its credibility in international markets.

For now, the launch of the pilot underscores a new chapter in Uganda’s resource management—one that seeks to balance the promise of gold with the responsibility of ensuring it fuels sustainable, legitimate growth.

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