Gold lifts export Uganda’s earnings

Uganda's gold exports have been a highlight of the country's earnings recently, with data from the Bank of Uganda indicating that in March, gold exports amounted to $268 million, and in April, they stood at $200 million. This surge in gold exports has positioned gold as the number one export commodity, surpassing traditional exports such as coffee. However, the sector has not been without its challenges, particularly in relation to tax levies and disputes between the government and gold dealers. To shed light on this issue, CNBC Africa spoke with Alan Lwetabe, the Director of investments at the Deposit Protection Fund in Uganda. Lwetabe highlighted the impact of government's intention to impose a 5% levy on refined gold exports and a 10% levy on unrefined gold exports, in addition to a $100 per kilo tariff on refined products. These levies led to a significant pullback in export activities by gold dealers in 2020 and 2021, resulting in a decline in gold exports. However, recent developments have seen the implementation of a 5% levy on refined gold exports and a revised tariff of $200 per kilo, leading to an improvement in export numbers as more exporters have resumed operations. The ongoing discussions between the Ministry of Finance, Uganda Revenue Authority, and the Gold Exporting Association regarding the 5% export levy on refined products remain a key unresolved issue. Lwetabe expressed optimism that a resolution would be reached in the near future to provide clarity for the sector. The government's ban on the export of unrefined gold in September 2022 aimed to encourage value addition and the export of final products. While this aligns with government's focus on structured mining approaches, the challenge lies in reorganizing the predominantly artisanal gold sector towards more organized practices. The new Mining Act emphasizes refined products, presenting an opportunity for the Ugandan gold sector to contribute significantly to GDP. Lwetabe addressed concerns regarding the import and export status of Uganda's gold, noting that while there are considerable gold deposits within the country, imported gold from neighboring nations is also refined locally. The establishment of refineries in Uganda has attracted gold from countries like the DRC and Central African Republic, positioning Uganda as a key player in the gold trade with its refining capacity reaching up to 99.9%. In response to challenges of fraud and money laundering, Uganda has implemented measures to enhance transparency within the gold sector. Efforts to identify beneficial owners, combat money laundering, and improve reporting systems aim to ensure accountability and compliance with international standards, ultimately leading to the removal of Uganda from the sanctions list. Regarding the tax disputes, the government has adjusted tariffs to mitigate revenue losses while addressing concerns of gold dealers. The current $200 per kilo tariff on refined products serves as a temporary middle ground, with ongoing discussions to potentially revise the 5% export levy on refined products. Despite differing perspectives between the government and dealers, efforts are being made to find a feasible solution that supports both parties and sustains the growth of the gold sector in Uganda.