THE Central Bank of Tanzania has started purchasing gold for its reserve and has so far acquired 400 kilogrammes of the precious metal.
Gold reserves have always been an important part of the diversification of global reserves for countries. It is an important asset of foreign exchange reserves.
Tanzania is among the countries with highest gold reserves, with data showing that it boasts 45 million ounces. Mining makes up more than 50 per cent of the country’s total exports, of which a large part comes from gold.
Responding to concerns expressed by lawmakers prior to an approval of the Ministry of Minerals’ budget estimates for 2023/24 financial year, Minister for the docket Doto Biteko said BoT has already prepared regulations for buying gold.
The ministry’s budget estimates for 2023/24, amounting to 89.4bn/- in both recurrent and development expenditures, was unanimously endorsed by the Members of Parliament, on Friday.
The minister said the regulations for buying gold were already presented to the Energy and Minerals Committee.
“What we’re doing now is finishing up the procedures in the local refineries so that the government can start buying gold and establish a National Gold Reserve to strengthen our currency.
“We will proceed gradually with this issue, and we will ensure that previous mistakes do not occur again,” he said.
He also stated that financial institutions should give time to refinery owners because the government is still working on other policy issues, such as the issue of incentives in the refinery.
According to the minister, the government has reduced the royalty for those who sell gold in the refinery from 6 to 4 per cent.
The minister stated that many MPs felt Tanzania could be doing better by increasing the contribution of the mining industry, helping small-scale miners, and luring more investment to increase its revenues.
Other recommendations are that the government should also become an investor in the sector to increase internal revenue.
“Because there is potential, this sector will contribute more. We haven’t had a large mine in more than 15 years, but we are now adding new mines,” Dr Biteko said.
Regarding free carried interest (FCI), he said that some mines have begun paying it and that the government has representatives in the boards of all the mining firms with which it has formed partnerships.
He added: “Even in management, there are some people we appoint, and there are some people that before the mining company appoints them, they must be approved by the government unlike in the previous years.”
Even the financial models of mining companies that have invested in the country, according to the minister, are done in collaboration with the government.
“We know every type of mineral, everything that will be mined, and the profit that will be generated,” he said.
He added: “Our poverty should decrease by between 15 and 20 per cent, and what can take us there is the mining, gas and other sectors.”
Before endorsing the budget yesterday, several Members of Parliament expressed their views on the need for more investment to be directed to the Geological Survey of Tanzania (GST).
Among them was Musoma Rural MP, Prof Sospeter Muhongo who said Tanzania can leapfrog in economic growth by establishing a gold reserve at the Central Bank.
Prof Muhongo stated that Tanzania’s vast gold reserve has everything it needs to change its economy for the better if it establishes a reserve at the central bank.
“The United States, Germany, Italy, France, Russia, and China lead the pack in terms of gold reserves.” “We have no reason not to have a reserve because we have a refinery in Mwanza that can achieve up to 99.9 per cent purity,” he said.
In 2021, President Samia Suluhu Hassan instructed BoT to start buying the refined gold to boost the country’s reserve of the precious metals.
