Tanzania ventures into gold-buying program

Tanzania has initiated a substantial gold-buying program with the aim of supporting the growth of the mining industry and bolstering foreign exchange reserves.

Emmanuel Tutuba, the Governor of the Bank of Tanzania made the announcement and said the initiative is aimed at diversifying Tanzania’s foreign exchange reserves, reducing reliance on a single currency (the US dollar). This diversification is intended to safeguard against currency devaluation and economic instability caused by global economic shocks.

He noted that the government has allocated funds to purchase gold, with a target of procuring six tonnes of gold in the current year, obtained from small-scale, middle-scale, and large-scale miners. 418 kilograms of gold has already been acquired as part of this initiative.

Boosting economic growth

Tanzania, like other economies, has been adversely affected by aggressive rate hikes by the US Federal Reserve to combat domestic inflation. This has resulted in a reduction in the amount of US dollars in circulation, leading to a depreciation of domestic currencies and a rise in the prices of imported goods.

Despite the challenges, the BoT reports that foreign exchange reserves remained adequate, primarily due to external loans and grants received by the government. However, foreign exchange inflows from exports were fully absorbed by the rising import bill.

The Tanzanian government has increased its engagement in the mining sector, including strengthening regulations, establishing a national gold reserve, and setting up mineral shops in various regions. These efforts are aimed at overseeing mineral exports and increasing the sector’s contribution to the country’s GDP.  BoT on the other hand is actively working on an Export Credit Guarantee Scheme to boost exports and improve the quality of domestically manufactured goods for international markets. This initiative is intended to support economic growth.