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Uganda to ban export of unrefined gold

The government of Uganda is set to ban export of unrefined gold.  According to Mr Moses Kaggwa, the Ministry of Finance acting director economic affairs, the proposal for the ban is contained in the Mining and Minerals Bill, 2021, which has not yet been signed into law. If signed into law, the Bill will introduce a standardized levy or charge for all gold exports.

“Yes there will be no export of unrefined gold. The Bill institutes a ban on export of unprocessed gold. We are waiting for the President to accent to the Bill after which we shall do regulations to implement the new law,” said Mr. Kaggwa.

There is a likely consideration of a standard rate for all gold exporters, which would introduce a surcharge of $100 (Shs381,178) or 5 percent levy of the value of every kilogramme of exported gold.  In April last year, government had proposed a surcharge of $200 (Shs762,356) for every kilogramme of exported gold, which was later implemented in July last year.

Modifying levy

However, this prompted gold dealers to suspend the export of the precious stones, citing introduction of an inconsiderate charge that would see them counting losses. Government subsequently engaged gold dealers, before conceding to demands, among which included modifying the levy.

In the August 2021 Ministry of Finance Economic Performance report, Finance Minister Matia Kasaija indicated that gold dealers had suspended exports due to tax-related challenges. However, he said, government had taken note of the concerns and had embarked on reviewing the problematic tax regime.

The impasse saw Uganda experience a sharp decline in export receipts, which by December 2021, according to Bank of Uganda, had dropped to $324m (Shs1.1 trillion) from $455m (Shs1.6 trillion) in June last year. The law was subsequently amended introducing a ban on the export of unprocessed gold, which according to Mr Kaggwa, was prompted by the growth of Uganda’s gold refining industry.

Uganda currently has five gold refineries including African Gold Refinery, Simba Gold Refinery, Bullion Refinery, Metal Testing and Smelting and Aurnish Trading. Two new companies including Nuran Ventures-SMC and Wagagai are in the process of setting up refineries to conduct both mining and gold processing.

Gold had by June last year become Uganda’s largest export, contributing at least 44% of the country’s export volume. Unrefined gold imports from both Tanzania and Zimbabwe have pushed the two countries into becoming some of Uganda’s largest trade partners, according to Bank of Uganda.

 

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