As seen on Reuters, Tanzania’s mining regulator has directed that all mining outfits exporting gold allocate at least 20% of the commodity to the central bank in order to support the bank’s efforts to diversify its foreign reserves.
The country’s central bank started acquiring gold from local traders and miners in the previous fiscal year, which ended in June, to enhance its reserves as the local currency, the shilling, depreciated.
According to the report, the apex bank, during the year ending June, managed to purchase around 418 kg of gold to strengthen its reserves and subsequently, the bank is looking to up the purchase to 6 metric tons of gold.
Tanzania’s Mining Commission, on Friday, declared that a new mining regulation, starting October 1, will obligate gold merchants to provide 20% of their gold to two approved refineries: Eye of Africa Ltd in Dodoma and Mwanza Precious Metals Refinery Ltd in Mwanza.
“All payments will be done according to the Bank of Tanzania arrangements,” the statement relayed.
Tanzania is a significant gold market in East Africa, having a solid trade relationship with its neighbors. The gold trade accounts for around 4% of its GDP.
Gold mining is also a significant source of employment and foreign exchange revenue for the country.
This was the effect of Uganda’s over $3 billion gold trade. Uganda often purchases raw gold and resells the refined product.
According to the Ministry’s June Performance of the Economy report, Tanzania supplied 83% of all EAC products sourced by Uganda in the year before May. This amounts to Shs1.6 trillion out of Shs1.9 trillion in EAC imports.
