The Bank of Uganda has launched a gold-purchasing program to diversify its reserves and combat illicit trade. But can it succeed against weak regulations and a lack of traceability?
Uganda’s merchandise export earnings surged to $13.43 billion in 2025, a 55% increase from the previous year, fueled by record-breaking performances in the gold and coffee sectors.

Overview:

Uganda's gold sector is rife with smuggling and money laundering. A new central bank program aims to create a formal, traceable supply chain to fight back against illegal trade.

KAMPALA, UGANDA — The Bank of Uganda (BOU) has launched a pilot program to purchase locally mined gold as part of a strategy to diversify its foreign reserves and combat widespread illicit trade in the sector.

The initiative comes as the gold industry, which accounts for 44% of Uganda’s total exports, faces challenges from weak regulation and porous borders that facilitate smuggling and money laundering, according to the Financial Intelligence Authority (FIA).

Most gold production is handled by informal, artisanal miners who operate outside formal systems, making them an easy target for criminal networks. The central bank’s new program aims to create a more transparent supply chain.

“We are only going to buy gold that is mined locally,” said BOU Governor Michael Atingi-Ego. “The chain of traceability is what we are putting in place.”

Central Bank Sets Conditions

The BOU issued a tender in April for a one-year framework arrangement with gold suppliers and refineries, with the potential for renewal. Key conditions for suppliers include:

  • Delivering gold to a domestic refinery selected by the central bank.
  • Payments will be made in Ugandan shillings within 30 days of delivery and invoice submission.
  • The program is a pilot project set to run for two to three years.

Experts Warn of Weak Oversight

While the BOU is pushing for traceability, industry experts warn that the current system is inadequate for proving the origin of gold. Bwesigye Binyina, executive director of the Africa Centre for Energy and Mineral Policy, said that without significant reforms, gold purchased by the central bank from existing refineries risks being classified as “contaminated” by international standards.

Binyina noted that most refineries rely on a basic “know your customer” process that involves middlemen rather than the miners themselves.

“The actual individuals delivering the gold are typically middlemen, not the miners themselves,” he said. “This creates a situation where a refiner might produce a tonne of gold, but only a portion can be traced.”

This lack of traceability leaves the central bank vulnerable to international scrutiny.

The FIA also highlighted the problem of minimal compliance and enforcement in the gold sector. Of the 77 licensed precious metals dealers, only 34 are registered with the FIA. Benjamin Wesonga, an anti-money laundering specialist at the FIA, pointed out that no cases involving precious metals dealers have been prosecuted in court, despite existing laws.