Tanzania: Central Bank Urged To Collaborate With GGR On Its Gold Purchasing Programme

By Prosper Makene, Geita

The Bank Tanzania (BoT) has been urged to collaborate with Geita Gold Refinery (GGR) on its Gold Purchasing Program, saying the move will help the Central Bank to improve quality and quantity.

GGR are most proud to be the first Automated Gold Refinery in Tanzania and the most modern in Africa with their focus being always to the benefit of the Artisanal and Small Miners.

Speaking shortly after visiting the BoT Pavilion at the ongoing 7^th Geita International Mining and Technology Expo, Ministry of Transport’s Permanent Secretary Professor Godius Walter Kahyarara said:

“GGR will help the Bank of Tanzania to avoid getting fake gold because they have the most modern and automated equipment which are there to check gold and its quality, therefore by working will be the good move for the BoT to improve the quality,” he said.

Prof Kahyarara added: “GGR has the licence to sell gold in any part of the world, they are member of London bullion marker association (LBMA).”

He further said that apart from working closely with GGR, the Central Bank can also team up with Tanzania Revenue Authority (TRA) and National Social Security Fund (NSSF) so as to support the small scale miners.

“BoT, TRA and NSSF can team up and allocate at least 500bn/- to support small scale gold miners due to the fact that small miners needs not huge capitals to get higher produce,” the economic professor said.

However, the state has in July last year, decided to allow the country’s central bank to become the statutory gold dealer to enhance the growth of the national gold reserve.

Since it began buying gold from local miners in the last financial year that end in June, the Bank bought a total of 418kg of gold at competitive world market prices.

The government was arm-twisted to scrap some nuisance taxes which seemed to frustrate the companies and local gold dealers, as well as introducing more friendly tax policies, the development which he said has played a key role in helping to overcome the challenges.

Apart from improving the local gold trade market flow, he observed that the better policies introduced by the government, including the 20 per cent gold purchase obligation as stated in Section 59 of the Mining Act (Cap123) and other incentives to support small-scale mining will likely cause Tanzania’s yellow metal production to rise sharply in future.

The other useful amendments made in the relevant regulations was the exemption of the one percent inspection fee and reduce the royalty rate to 2 percent, from 6 percent on the supply of gold to BoT, the aim being to incentivise the supply of gold to BOT, to enhance the growth of national gold reserve and in turn address the shortage of US Dollars in Tanzania.

With the new regulations the local gold mining companies, individual miners and dealers who have been registered to Value Added Tax (VAT) can now claim for input when trading with BoT because the relevant tax has now been zero-rated.

In his remarks to open the Expo here last week, Deputy Prime Minister Dr Doto Biteko encouraged all gold sellers in the country to sell their commodities directly to BoT, ensuring their prompt payment and the best value for their gold.

Tanzania's mining regulator has been directing all mining firms and traders exporting gold to allocate at least 20 percent of the commodity for sale to the central bank to bolster the bank's move to diversify its foreign reserve/

Miners and traders, according to the bank, are required to submit the reserved gold to two mineral refineries, Eye of Africa Ltd in the capital of Dodoma and Mwanza Precious Metal Refinery Ltd, located in Mwanza.

Gold is one of the country’s most valuable exports and the approach not only enhances the bank’s reserve assets but also fosters growth and sustainability in the local gold industry.

Recognition of the BoT as the statutory gold dealer aims to harmonise the BoT Act and Mining Act by addressing the existing ambiguity as well as enhancing the purchase of gold by the BoT to ensure the growth of the national gold reserve in the country.

Gold accounts for at least one-third of Tanzania’s exports and is considered one of its strongest currency stabilisation export products and during the financial year 2021/22, gold accounted for approximately 25 per cent of Tanzania’s exports.