BOU Warned Against Risks Of "Comingled" Gold

 

One of Uganda’s leading mineral experts, Don Bwesigye Binyina has advised the Central Bank to move with caution as it intensifies the purchase of gold from local refineries. 

In June 2024. Bank of Uganda begun buying gold from local minersin a bid to boost its foreign reserves.     Bwesigye Don Binyina, the Executive Director at Africa Centre for Energy and Mineral Policy (ACEMP) told Journalist in Kampala that apart from buying from the artisan miners, the Central Bank also makes purchases the refineries located in Kampala and Entebbe. 

///Cue In “One of the …… 

Cue Out…. From undisclosed sources////

Uganda currently has about six gold refineries which mainly get supplies from artisan miners, middlemen and from some elements that could be smuggling it from neighboring DRC and South Sudan among others. 

Binyina said the problem with purchase from the artisan miners and the local refineries is that they lack stringent mechanisms to trace the origin of the mineral. He explained that the refineries largely depend on Know-Your Customer or KYC mechanism to trace the origin of gold. He warns that the Central Bank could in future be accused of facilitating or buying illicit gold in the Great Lake’s Region or of purchasing comingled gold unknowingly.   

Some experts have noted that the "comingling" of gold in Uganda is a complex issue with implications for the country's economy, security, and the fight against illicit activities.  

“So if you are Uganda. If you are BOU, and the refinery where you have bought your one ton of gold only has evidence that only half a ton came from you internal mines, and the other half a ton is from a KYC source, whose origin is not verifiable, by international standards this is comingling and they will have you for dinner” explained Don Binyina.      

The "comingling" of gold refers to the practice of mixing gold from different sources, including domestically mined gold and gold potentially imported from neighboring countries like the Democratic Republic of Congo (DRC). 

Binyina said the practice of comingling in gold trade, raises questions about the origin and legality of the gold, and can be a source of illicit financial flows and potential security risks”  said Binyina. He has served the Chairman of the International Conference on the Great Lakes Region (ICGLR) Regional Audit Committee. 

Bank of Uganda Governor, Michael Atingi-Ego last year told Parliament’s Committee of Commissions, Statutory Authorities, and State Enterprises (COSASE) that the Central Bank had put in stringent guidelines for purchasing gold locally. Part of those measures is a pre-qualification process for gold suppliers and refineries. 

They also emphasize direct sourcing from artisanal, small, medium, and large-scale miners.   Atingi-Ego was in Moroto early last month as part of drive of mobilizing artisan gold miners about the opportunity now that the Central Bank is part of the gold buyers. 

The ICGLR Regional Audit Committee serves as a technical oversight body to ensure transparency, consistency, and compliance within the ICGLR framework.

It plays a crucial role in monitoring the certification process of minerals traded internationally within the Great Lakes Region, ensuring they are not linked to conflict or illegal activities.

It will hold its 26th meeting in Nairobi, Kenya, from April 23–25. The focus: strengthening the Regional Certification Mechanism (RCM) to advance responsible mineral trade across the Great Lakes Region through stronger compliance with the standards.

To avoid being in bad books with regional body, Binyina is advising that the Bank of Uganda should consider establishing its own refinery other that depending on private sector run refineries that are prone to risks of traded in illicit and comingled gold. Zimbabwe has taken that root by establishing a national gold refinery operated by the government.    

////Cue In “And we have made that clear……..

Cue Out ….. all the gold from there”///

Uganda being a member of ICGLR already took steps forward by enacting a law the ICGLR Act (2018) which enables the implementation of regional certification and audit of conflict/blood minerals. 

Uganda also participates in the ICGLR's Regional Initiative to fight against the Illegal Exploitation of Natural Resources (RINR), which includes the ICGLR Certificate for designated minerals like tin, tungsten, tantalum, and gold (3TGs).  

Part of the fight against illicit gold and other minerals is covered under the Anti-money laundering law. In April 2024, Uganda attained s the Mineral Certification Scheme of the International Conference on the Great Lakes Region (ICGLR).

It was the 5th country among the 12 to attain the certificate after ratifying the protocol on the fight against illegal exploitation of natural resources in the region. It followed DRC, Rwanda, Burundi, and Tanzania.

The Regional Certification Mechanism is one of the six tools approved by ICGLR’s 12 Heads of State and is part of the Regional Initiative against the illegal exploitation of Natural Resources (RINR). 

It is a compulsory regional standard for certification of the 3Ts (tin, tantalum, tungsten) and gold sourced from or transiting across an ICGLR Member State. Despite those efforts, Uganda continues to report more earnings from gold exports than what t all the local mines could be producing annually. 

Paul Twebaze, a research fellow at Advocates Coalition for Development and Environment (ACODE) told URN in February that the gold exports from Uganda has been on the rise since 2019.  

“Exports continue to increase but the problem is that they are increasing when the production is low. When you look at the statistics in the EITI report, DGSM reported that the production of gold was about 15 kilos. The question is where is the extra gold coming from?“Said Twebaze, a member of Uganda EITI Multi Stakeholder Group MSG.

According to Twebaze, the challenge is that Uganda is now being perceived as an illicit country in terms of gold trade.

“Because there seems to be a lot of gold that comes here illegally, and then it is exported as Ugandan gold because we are not clear in tracking the origin,” he said.   

Minerals from the Great Lakes region have long suffered from the distrust of companies and traders listed on international stock exchanges, who have tacitly suspended supplies to avoid being indexed.

The supply chains of gold remain complex and opaque. They are often concentrated in the Great Lakes region, where instability and cyclical conflicts exists.