BoT beats gold target in 20 months

DAR ES SALAAM: THE Bank of Tanzania (BoT) has purchased 29 tonnes of gold under its domestic gold-buying programme, surpassing its three-year target of 20 tonnes in just 20 months since the initiative was launched in October 2023.

BoT Governor Emmanuel Tutuba announced the milestone yesterday in a special interview with the Tanzania Broadcasting Corporation (TBC) to mark the central bank’s 60th anniversary.

At current international prices, the governor estimated the country’s gold holdings at approximately 10.5tri/-, making the precious metal an increasingly important component of Tanzania’s reserve portfolio.

Mr Tutuba said about 11 tonnes of the gold acquired have already been deposited with the Bank of England as part of the country’s official international reserves, while the remaining stock is being managed strategically by the central bank.

He said the achievement reflects the success of BoT’s strategy to strengthen foreign exchange reserves, support the stability of the Tanzanian shilling, formalise the country’s gold value chain and expand financial inclusion among artisanal and small-scale miners.

“We officially began purchasing gold on October 1, 2023, after making the necessary legal amendments. To date, we have acquired about 29 tonnes and the programme continues to perform very well,” he said.

According to the Governor, the initiative was designed around four strategic objectives, led by diversifying Tanzania’s reserve assets through the inclusion of monetary gold in line with the Bank of Tanzania Act.

He said the programme has also established a formal and transparent gold trading system while bringing more artisanal and small-scale miners into the formal financial sector.

“So far, we have achieved all the objectives we set. Besides purchasing 29 tonnes of gold, we have strengthened the entire supply chain and formalised gold trading in the country,” he said.

Mr Tutuba attributed the programme’s success to a market-based purchasing model under which the central bank buys refined gold at international market prices and pays suppliers within 24 hours.

He said BoT currently works with four accredited refineries and is finalising an agreement with a fifth refinery in Chunya, while another refinery is under construction in Mara Region.

The bank purchases only gold refined to 99.99 per cent purity, the internationally accepted standard for monetary gold.

The Governor said attractive pricing, prompt payment and tax incentives have encouraged miners to sell more gold through formal channels.

Although exporters are required by law to reserve at least 20 per cent of their gold for domestic sale before exporting, many are voluntarily selling their entire production to the central bank.

ALSO READ: Gold boom fuels mineral recovery growth

As a result, he said, gold smuggling has declined significantly while government revenue has increased through improved tax compliance across the mining value chain.

“We expected to purchase 20 tonnes within three years, but we have already reached 29 tonnes in just 20 months because many miners are choosing to sell more than the mandatory requirement,” he said.

Mr Tutuba said BoT has sufficient financial capacity to purchase all qualifying gold produced locally, provided it meets internationally recognised refining standards.

He added that beyond strengthening foreign exchange reserves, the programme has improved transparency in the mining sector, boosted miners’ earnings, expanded the formal economy and increased government revenue, while positioning gold as a strategic asset for safeguarding macroeconomic stability and supporting long term economic growth.

The Governor also dismissed speculation that the central bank intends to hold the gold indefinitely, saying the law allows BoT to buy and sell gold as part of prudent reserve management.

“We are not only buyers, we also sell. Gold is an investment asset. When market conditions are right, we can realise gains and continue managing our reserves strategically,” he said.

He added that BoT has set an internal ceiling of 30 per cent for gold within its reserve portfolio, with current holdings accounting for about 27 per cent, leaving room for further purchases and strategic sales depending on market conditions.