By Adonis Byemelwa
Gold has long been a universally recognized anchor of wealth, a safety buffer and an essential symbol of economic stability. In recent years, amid a variety of global risk shocks, central banks around the world have revisited the value of gold and triggered a surge in increased gold holdings to hedge against economic instability and inflationary pressures.
The Bank of Tanzania’s Domestic Gold Purchase Programme is the main mechanism for the country to join this trend and to relaunch its gold reserve buildup program.
“By June 10, 2026, the programme had accumulated 27.5 metric tonnes of gold reserves,” said Bank of Tanzania Governor Emmanuel Tutuba at the 60th anniversary celebration of the central bank in Dar es Salaam on June 12, 2026. President Samia Suluhu Hassan and prominent leaders from the government and financial sectors graced the event.
The batch of gold was worth around 10 trillion Tanzanian shillings at the time, based on the world gold price and the appreciation of the global gold market in the last few years. But third-party specialists have warned that the valuation of such reserves will go up and down with international commodities prices.
The basic rule of this programme is that the central bank buys gold produced locally and in local currency, the Tanzanian shilling, and not in foreign currency, as in the classical reserve accumulation model.
This not only converts domestic natural resources into assets of national strategic reserve, but also compensates local miners and traders with local currency to encourage local industry practitioners.
Tutuba said the project was a necessary pillar to build foreign exchange reserves, improve the diversification of reserves and allow natural resources to serve national financial stability.
He believes it might link local resource riches to the national monetary system and lessen dependence on external reserve channels. The strategy is a revival of an old plan. The Bank of Tanzania first built gold reserves in 1990 and halted the practice in 2002, citing changes in reserve management priorities.
The preliminary groundwork for this restart goes back to 2021, when President Samia proposed supporting value addition in the mining sector and a gold refinery was launched in the Mwanza region the same year. This arrangement fits perfectly into the overall global trend of central banks increasing their gold holdings.
Tanzania has undertaken a gold reserve rebuilding project. The main driving purpose is to develop its domestic mining sector and redirect mineral riches to boost its national economy.
The country’s central bank, Bank of Tanzania, formally inaugurated the scheme in April 2023 and completed its first gold purchase of 400 kg. In October 2024, it introduced a structured gold procurement system with a transaction benchmark price to accelerate the project’s implementation.
Officials from the Tanzanian government said that the project has achieved noteworthy achievements, and official sources also said that gold purchases have enhanced the diversification level of the country’s reserves.
However, it is a common opinion among academia and industry that the project should undergo a full multidimensional assessment, and not only the good outcomes should be considered. An economist was the first to suggest that the appraisal of projects should estimate benefits and costs at the same time.
The money that was spent to buy gold could have been invested in other reserve assets, infrastructure or other key areas of economic priority. Assessments should not just take into account the total value of gold but also correctly assess the opportunity cost of buying gold.
Central bank reserve managers reiterated the critical significance of gold in diverse reserve portfolios: unlike sovereign bonds and foreign currency deposits, gold has no relationship to the financial position of any one country or institution.
It can function as a store of value in times of global economic instability to protect against the volatility risk of other assets. They also cautioned that gold is not a risk-free asset. It may hold its worth in the long term, but the market price can swing wildly in the near term.
In the event of a fall in international prices of gold, the overall value of the country’s reserves will be directly affected. Therefore, a balanced reserve portfolio must be maintained and the country must not over-rely on gold as a single asset. Financial analysts also noted that gold has two intrinsic defects.
Firstly, it is illiquid, as real gold takes far longer to turn into usable foreign money than high-liquidity assets such as major foreign currencies and government securities. It cannot be used as fast as traditional foreign exchange reserves to stabilise exchange rates, pay for imports or settle foreign loans. Second, the gold does not earn interest income.
Unlike government bonds and some foreign currency deposits that can earn consistent returns and still keep liquidity, gold’s value is primarily in capital preservation, portfolio diversification and hedging against specific risks, and it cannot generate regular income.
Industry insiders agreed to conduct a thorough evaluation by publishing detailed data on the composition of the country’s reserves before and after the gold purchases, increasing transparency in reserve allocation and allowing investors and the public to accurately understand the real impact of the project.
Several central banks across the globe, including those in Africa, have in recent years been successively adding to their gold reserves in a bid to decrease their exposure to global financial shocks.
Tanzania has relaunched its systematic gold procurement program, which had not been in operation for many years, and has accumulated 27.5 tons of gold reserves up to now. While this amount is below the gold holdings of the biggest countries of the world, it is a significant addition to the country’s reserve assets and is part of the wider approach to build economic resilience.
The Bank of Tanzania has established a stable market for the local miners and traders as the buyer of last resort for the domestic gold. The scheme’s proponents claim it may spur the formalisation of the gold sector, enhance transparency throughout the supply chain and foster a stronger relationship between the nation’s mineral resources and its economic aspirations.
“The key requirement for the program to be successful is competitive pricing and efficient procurement processes, particularly that official purchase prices closely mirror international market exchange rates to maintain the confidence of miners, traders and refineries,” industry stakeholders say.
The initiative also enables small-scale miners, who contribute a significant portion of the country’s total gold production, to have more formal access to the market. Experts say three supporting measures need to be in place to get the most out of the program: boosting productivity, broadening access to funding and supporting responsible mining.
They note that domestic gold demand will require meeting three other conditions: environmental compliance enforcement, protection of community interests and reduced negative social repercussions.
Transparency is key. Observers are encouraging the central bank to publish purchases of gold, how much has been bought, how it is priced and what the reserves comprise regularly, as is the norm with central banks across the world. Economists generally feel that the gold reserve program is a good way of boosting Tanzania’s financial security.
The move takes advantage of the country’s status as one of Africa’s leading gold producers to turn natural resource wealth into strategic reserve assets and limit susceptibility to foreign economic shocks. However, the long-term performance will be dependent on future gold prices, reserve management, transparency and development in the mining sector. The 27.5-ton reserve milestone is a positive development, but its sustainability will rely on how well opportunities and risks are managed.
