TZ boosts gold reserves with domestic purchase programme

MTWARA: THE Bank of Tanzania (BoT) has acquired two tonnes of gold for its reserves since July 2024, marking a significant milestone in its domestic gold purchase programme, which targets six tonnes annually.

Speaking at a seminar for senior business and financial journalists in Mtwara on Monday, BoT Financial Analyst Dunga Nginilla attributed the programme’s success to pragmatic measures addressing earlier challenges, as well as recent legislative measures and incentives for gold miners and licensed dealers.

“So far, we have acquired over two tonnes and expect a substantial increase in gold inflow. We are optimistic about meeting our annual target,” said Mr Nginilla at the BoT-organised seminar, aimed at improving journalists’ understanding of the central bank’s operations and enhancing public awareness.

The central bank’s domestic gold purchase programme picked up steam in October 2024 to diversify foreign exchange reserves and bolster the shilling against downward pressure.

Mr Nginilla acknowledged that the programme initially faced challenges due to extensive documentation requirements and prolonged administrative processes.

“Earlier, the domestic gold purchase programme did not perform as expected due to extensive documentation requirements and prolonged administrative processes, which discouraged potential sellers,” Mr Nginilla said.

“However, the Bank of Tanzania took pragmatic measures to address these challenges, easing documentation processes, streamlining procedures, and reducing bureaucracy,” he said.

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He said the central bank implemented legislative measures and provided incentives to surpass market offerings, making selling gold to the BoT highly attractive.

He emphasised that the bank offers a competitive world market price, ensuring sellers receive premium value.

In addition, sellers receive 100 per cent payment within 24 hours of a confirmed fire assay report from an approved refinery, guaranteeing rapid compensation.

The BoT also covers all refining costs, eliminating a significant expense for sellers.

Furthermore, in accordance with section 59 of the Mining Act, the Bank of Tanzania holds the right of first refusal for a minimum of 20 per cent of gold exports.

This ensures mineral rights holders and licensed dealers a guaranteed market for a substantial portion of their gold, providing a direct financial advantage.

Additionally, royalty fees have been reduced from 6 to 4 per cent and sellers are now exempted from the 1 per cent inspection fee and enjoy zero-rated Value Added Tax (VAT), further increasing their profit margins.

As Africa’s fourth-largest gold producer and the world’s 18th, Tanzania is poised for further growth in gold production between 2023 and 2027.

In 2024, Tanzania’s gold production reached a record 60,000 kilogrammes (60 metric tonnes), up from 55,000 kilogrammes in 2023, according to CEIC data