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Gold is now Uganda’s number one foreign exchange earner
A report by the Central Bank of Uganda shows that Uganda is now exporting more gold than coffee. The gold exports increased by 23 percent last year compared to 2017, for the first time overtaking coffee as the East African country’s top foreign exchange earner. Adam Mugume, Bank of Uganda’s Executive Director for Research told Reuters that last year’s jump was caused by an additional two small refiners in the country.
The report states that the country exported gold worth $514 million in 2018, compared to $418 million earned in 2017. Uganda majorly exports agricultural products and coffee which has been its most important and biggest export.
In 2018, coffee exports in Uganda amounted to 4.17 million bags worth $436 million compared to 4.77 million bags worth $555 million the previous year, a 12.58 per cent and 21.30 percent reduction in both quantity and value respectively. Some of the factors that led to this were low global prices on account of higher crops in Brazil which affected export prices and high stocks at exporter and farm levels.
Gold export had been negligible for the country which ranks as Africa’s number one coffee exporter. A decade ago, Uganda’s gold shipments stood at $1o million. Officials say gold exports from Uganda started to grow steadily in 2015 after the commissioning of a major refinery-African Gold Refinery (AGR) which is located in Entebbe, Wakiso District.
AGR which is worth$15 million was opened in 2017 to reduce revenue loss due to the export of raw gold. While opening the refinery two years ago, President Yoweri Museveni said it was the first of its kind in sub-Saharan Africa apart from one in South Africa. The refinery has the capacity to process and refine raw gold to pure gold of 99.99 percent, according to the owners.
The report showed that Uganda’s export earnings for the year ending 2018 stood at $3.6 billion up from $3.4 billion earned in 2017.
Recent years have shown that African countries are susceptible to economic shocks and fluctuations in currencies and commodity prices. Some are more vulnerable than others because their economies are dependent on the export of one or just a few commodities or primary products. When there is a downturn in commodity prices, mono-product economies such as Nigeria, Angola suffer economic stagnation. And this may have been the case for Uganda if it had not invested in its mining sector in 2015. Thus, there is a need for African countries to diversify their economies and introduce measures to reduce over-reliance on certain mono products.