TANZANIA: THE Bank of Tanzania (BoT) has announced plans to purchase gold from local sellers at competitive world market prices, a move aimed at bolstering the country’s foreign reserves.
By aligning gold purchases with global market standards, the BoT seeks to stabilise the gold market, while supporting the national economy.
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.
“We encourage all gold sellers to take advantage of this opportunity to sell directly to BoT, ensuring prompt payment and the best value for your gold,” said the BoT in a statement issued yesterday.
By purchasing gold at global market rates, the central bank aims to secure a stable source of foreign currency, which can be used to balance imports and stabilize the shilling.
The BoT programme offers reduced fees and faster payment processing as part of the 20 per cent gold purchase commitment outlined in Section 59 of the Mining Act (Cap 123).
Other incentives that gold sellers will enjoy include a reduction of the royalty rate by over 30 per cent from 6.0 to 4.0 per cent on the supply of gold to be sold to the central bank.
“This amendment goes parallel with making royalty paid to the gold supplied to the BoT as final payments,” the statement shows.
Also, as part of the 20 per cent gold purchase commitment, the BoT said it will pay for all refining expenses.
“Having a stronger reserve base will enhance our ability to weather external economic shocks and reduce reliance on external borrowing,” the central bank said.
According to the central bank, building reserves in precious metals like gold strengthens Tanzania’s financial position internationally.
The country’s foreign exchange reserves stood at 5.29 billion US dollars at the end of July this year sufficient to cover 4.3 months of projected imports of goods and services.
An economist and investment banker, Dr Hildebrand Shayo said an increase in the licensed gold dealers’ purchases of yellow metal, or gold can be used as a stand-in for small-scale sector production.
He said tight government policies, such as the 20 per cent gold purchase obligation stated in Section 59 of the Mining Act (Cap123) and other incentives to support small-scale mining, will cause Tanzania’s yellow metal production to rise sharply in future.
However, Dr Shayo said the fact that BoT will pay for all refining expenses raises questions about the type of gold they are purchasing.
He said looking critically at “this is very important to ensure the problems and challenges encountered in 1990 on similar intentions will not repeat,” causing the government to incur a huge loss that must be clearly understood.
“Thus, the query is still open,” Dr Shayo said, “What are the most important markers, elements, or concerns to consider while attempting to build an environment that would result in win-win situations for Tanzanian miners, purchasers and authorised exporters of this yellow metal outside of BoT buying arrangements?”
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As of April, this year, the BoT had purchased gold worth 26 million US dollars against a target of six tonnes valued at 400 million US dollars in the current fiscal year.
In the 12 months to June, the central bank bought 418 kg of gold to beef up its reserves.
Furthermore, the government continues to encourage local gold refining industries to obtain the London Bullion Market Association (LBMA) certification to enhance quality, gold reserves and marketability.
Miners and traders, according to the statement, will be required to submit the reserved gold to two major mineral refineries, Eye of Africa Limited in the capital Dodoma and Mwanza Precious Metals Refinery Limited located in the lake city of Mwanza in the north of the East African country.
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