BOU to secure global custodian for gold reserves – governor

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The Bank of Uganda (BOU) has signed contracts with two gold suppliers, and the next move is to secure an international custodian to hold Uganda’s gold reserves, Governor Michael Atingi-Ego, said.

This comes after the central bank finalised deals with EuroGold Refinery Ltd and Feldstein Trading Limited to start buying gold locally.

“These are the two gold refineries that have been licensed by BOU. We have signed contracts with them. So, they will be the ones that will be refining the gold that we will be buying,” Atingi-Ego told New Vision on April 9.

“The gold suppliers will be taking the gold to these refineries, where the BOU will be meeting them to buy. Suppliers deliver gold to the two refineries for initial testing to confirm it is mined locally and meets purity standards.”

International custodians play a central role in managing central bank gold reserves, offering secure storage that supports liquidity, limits geopolitical risk and boosts credibility in global markets. The Bank of England is the most widely used location, holding gold for 64% of surveyed central banks, according to reports.

The signing of the two contracts also marks the start of the Domestic Gold Purchase Programme. The central bank aims to buy its first 100 kilograms of refined gold, worth about $160m (sh592b), and use the programme to add value to Uganda’s gold industry while building official reserves.

In recent years, gold has regained its importance as a financial asset, with many investors using it as a hedge against inflation and market volatility. Globally, central banks and other financial institutions continue to hold significant amounts of gold as part of their reserve assets.

The most recent data from April 2023 reveals that international organizations, including the International Monetary Fund (IMF) and the Bank for International Settlements, possess approximately 9% of the world’s official gold holdings.

Artisanal and small-scale mining (ASM) plays a significant role in gold production. ASM is the second largest employer after agriculture and employs 10 times more miners than the large-scale mining sector, producing 18% of Africa's gold. However, the sector remains largely informal and unregulated.

Uganda’s proximity to conflict torn countries such as the Democratic Republic of Congo and South Sudan, both major sources of smuggled minerals, has compounded the problem. Precious stones and metals enter the country illegally and are moved on to global markets through licensed refineries, often without proper oversight.