Home Business Gold Contributes Shs6 Million to Country’s Total Exports says UGEITI Report

Gold Contributes Shs6 Million to Country’s Total Exports says UGEITI Report

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The biggest paortion of exported gold from Uganda is allegedly smuggled from DRC (Courtesy Photo)

In the FY2019/20, Uganda’s gold exports contributed to Shs0.006Bn (Shs6m) to the total State Exports, the May 2022 Uganda Extractive Industries Transparency Initiative (UGEITI) Report has revealed.

According to the Report, gold worth Shs4.17Tn was exported with the value of local production amounting to Shs1.87Tn.

This literally implies that the major part of the gold exported is not part of the local and formal production.

“The country has experienced a sharp increase in gold exports since 2016.

However, as demonstrated in the figures above, there have been significant discrepancies between the gold production figures reported by the DGSM and the actual exports of gold reported by the URA,” the report read in part.

The Report further says that the information obtained from the Directorate of Geological Survey and Mines (DGSM) indicates that there were no permits awarded during FY 19-20 to export unrefined gold

On March 17, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), sanctioned Alain Goetz, the African Gold Refinery in Uganda, and a network of companies involved in the illicit movement of gold valued at hundreds of millions of dollars per year from the Democratic Republic of the Congo (DRC).

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U.S said in a statement that day, that more than 90% of DRC gold is smuggled to regional states, including Uganda and Rwanda, where it is then often refined and exported to international markets, particularly the UAE.

“In eastern DRC, where there are approximately 130 active armed groups, the gold trade is a major driver of conflict. A network of armed groups, smugglers, and companies generates illicit revenue from the gold industry through forced labor, smuggling, or extorting payments from miners. These actors use revenue from gold to finance armed conflict and enrich themselves while depriving the DRC of tax revenue and disregarding the environment and local communities,” read part of the statement.

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The UGETI Report recommended that the perfect panacea for gold trade in Uganda is proper regulation and transparency in the sector.

“It is recommended that both DGSM and URA put in place a mechanism for sharing production and export data to ensure better monitoring of the trading activities in the country’s mineral sector,”

Alain Goetz

Embattled Belgian Gold Dealer Alain Goetz

Goetz, a Belgian businessman was among the top gold dealers who were sanctioned by the U.S. he operates the African Gold Refinery (AGR) in Uganda, since establishing AGR, the U.S said that Goetz has held multiple leadership positions in the company, including chief executive officer and director, and has been involved in AGR’s gold trading activities.

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In 2018, Goetz acknowledged that AGR refines about 150 kilograms of gold from the DRC per week, or approximately 8.5 tons per year, valued at $496 million. This amounts to almost all of Uganda’s total gold exports in 2018, which were approximately 10 tons and valued at $515 million.

AGR

President Museveni while launching the African Gold Refinery

The U.S in the sanctions said that AGR since 2016 had sourced illicit gold from mines in regions of DRC that are controlled by armed groups, including the Mai-Mai Yakutumba and Raia Mutomboki that are involved in destabilizing activities in South Kivu, DRC.

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“AGR has a refining capacity of 219 tons per year and is considered one of the largest gold refineries in Africa, after refineries in South Africa and Ghana. AGR and Goetz acknowledged that a share of the gold AGR refines comes directly from mines in the DRC and has taken over a significant portion of the market for gold trafficked from the DRC,” they said

Government in the 2021 Tax Amendment Act, levied a 10% levy on unprocessed Gold and 5% on the processed one but this, in turn, decreased the gold exports for example between July 2021 and December 2021, no single tax was collected from the exports.

State Gold Exports Vs Other Minerals

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According to the Report, Gold was the least contributor to State Exports as compared to other minerals, in the mining sector.

Contribution of Gold Exports to the total State Exports in the FY2019/20 Source UGEITI Report 2022

Out of the total Shs2.5Bn, wolfram amounted to exports worth Shs1.35Bn, Tantalite Shs0.64Bn, Tin Shs0.58Bn, and Gold Shs0.006B, and this all together amounted to 0.018% out of the total Shs14Tn country’s exports in the FY2019/20.

In terms of mining to GDP, the report highlighted that the macro-economic data, obtained from the Uganda Bureau of Statistics (UBOS), indicates that the mining and quarrying sector accounted for Shs2.26Bn in the FY2019-20 which represents 1.62% of the national GDP on current basic prices, including 1.17% from formal sector activity and 0.46% related to informal sector activities. The contribution of the mining and quarrying sector to GDP has decreased compared to the prior year’s contribution (1.72%).

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The contribution of the extractive sector to the Government’s revenue amounted to Shs.436.3Bn, accounting for 1.27% of the total domestic revenues in the FY 2019-20.

“The value of exports from the extractive sector amounted to Shs2.598 billion accounting for 0.02% of the country’s total exports in the FY2019-20.

“The contribution of the mining and quarrying sector to GDP has decreased compared to the prior year’s contribution (1.72%),”

“ASM’s direct employment is estimated at approximately 300,000 jobs. All direct employments represent 1.84% of the country’s total workforce of 16.3 million.

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According to the ALFS for FY 2018-19 there are no statistics related to the employment in the mining and oil and gas sector.

New Deposits Discovery

President Museveni while delivering the State of the Nation Address this week.

While delivering the State of the Nation Address this week, President Museveni announced the massive discovery of gold deposits in Uganda.

He said that over 30 million deposits have been discovered with gold worth $12Tn.

“The people of the ministry were saying that we give it out at $678Bn I refused we cannot just give out our wealth like that, we shall refine it from here before exporting it,” he said.

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Mining Sector

The only estimate we have found regarding employment in the mining sector concerns the Artisanal and Small-Scale Mining (ASM) which represents the key sub-sector of Uganda’s mining industries and plays an important role in local development as well as job creation (estimated at over 1 million direct and indirect jobs in 2018, benefiting around 10% of the country’s population) 174.

Direct employment in ASM is estimated at approximately 300,000 jobs, almost 40% of which are held by women and includes approximately 40,000 jobs in gold mining and 93,000 jobs in clay brick production 175.

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Direct employment accounts for 1.84% of total employment of 16.3 million as estimated above. Oil and gas sector According to the Uganda Bureau of Statistics (UBOS), the oil and gas sector employs 178 persons directly, which represents only 0.001% of the total employment of 16.3 million persons in the country.

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