Eng Olanya, Dr Mugyenyi, Kittengo and Tabaaro discussing the missed opportunities in the mining sectorExperts in the extractives industry have partly attributed Uganda’s economic instability, particularly exchange rate volatility and inflation, to poor management of the country’s mineral wealth, warning that weak implementation of existing laws and policies is undermining the sector’s contribution to the economy.They argue that although Uganda has established legal and policy frameworks to ensure mineral resources benefit the economy and citizens, enforcement remains inadequate, with critical gaps in value addition, revenue mobilisation and community participation.The concerns emerged following the 7th National Forum on Business and Human Rights in Uganda, organised by the Ministry of Gender, Labour and Social Development.Dr Frank Mugyenyi, Global Executive Director of the Minerals Africa Development Institution, said Uganda’s mineral development strategy has prioritised revenue generation at the expense of value addition and industrial development. He noted that although gold is refined to 99 percent purity, the country continues to export it because it lacks a domestic gold manufacturing industry capable of producing finished products.“Uganda, like most African countries, is still looking at maximising revenue rather than optimising value. When you are looking at maximising revenue, you are looking at milking the cow, and you don’t know whether it has salt, it has this, it has that,” Mugyenyi said.He called for investment across the entire gold value chain, including the manufacture of finished gold products, arguing that a similar approach should be adopted for other minerals to strengthen domestic industries and retain more value within the economy.Mugyenyi also raised concerns about the limited economic benefits accruing to communities hosting mining operations, noting that the industry has not generated sufficient employment.He said the exemption of gold mining from royalty payments further limits benefits to host communities, particularly when compared to other minerals that attract a five percent royalty payable to landowners.However, Mugyenyi argued that community benefits should extend beyond royalties to include meaningful participation in the development of the sector.“These are the owners of the land; these are the owners of the minerals. They are not supposed to be receiving something from royalties. They are supposed to be part of the entire development because these guys need education, food, shelter; they need a decent life,” he said.He further questioned whether the existing legal framework adequately supports government’s mineral value addition policy, arguing that gaps in legislation continue to constrain the sector.“We have a good policy on the table, but do we have the law that supports that policy? Even the Minerals and Mining Act of 2023 leaves out some actors, especially in the development of minerals, which means they have no regulations,” he said.Mugyenyi also criticised the regulatory framework for artisanal and small-scale miners, saying it does not adequately provide for their growth and development, leaving them vulnerable to exploitation.He questioned the narrow definition of artisanal miners, which largely focuses on use of rudimentary tools, arguing that the framework fails to accommodate miners who make significant discoveries despite operating with limited resources.“You define an artisan as someone who uses rudimentary materials. What if I hit one stone while using my rudimentary tools, like a Tanzanian guy who found a tanzanite that cost about three million US dollars?” he asked.Gov’t Defends PolicyHowever, Morris Tabaaro, a Regional Inspector of Mines, defended government’s approach, saying President Museveni’s directive on gold royalties was intended to attract investment in the refining industry.Tabaaro said the policy had contributed to issuance of 500 licences to investors and discovery of approximately 20 minerals, benefits he argued outweigh revenue foregone through royalties.He also pointed to restrictions on export of raw gold and Bank of Uganda’s entry into gold purchases as measures aimed at strengthening the domestic gold industry.“President Museveni banned the export of raw gold. The Bank of Uganda started buying gold this year, but until then, all gold was being bought by foreigners. So, imagine if all the gold customers said, ‘I will not buy any more gold.’ What happens?” he asked.Tabaaro added that while Uganda’s mineral resources belong to its citizens, government policy must strike a balance between maximising national benefits and maintaining investor confidence to avoid disrupting the industry.The experts, however, challenged government’s position, arguing that expansion of the refining industry has not translated into sufficient benefits.They noted that Uganda had only one gold refinery in 2017, compared to nine currently operating, while the Ministry of Energy and Mineral Development has confirmed that 11 additional refinery licences are pending approval.They also called for expedited establishment of a National Minerals or Mining Authority to regulate the growing number of players, strengthen oversight and address capital flight and revenue leakages.Eng. Tonny Olanya, Executive Director of Lyec Bullion Consults and Afri Gold Bullion Ventures, highlighted the disparity between Uganda’s mineral wealth and persistent poverty in mining communities, particularly in Karamoja. He cited delays in issuance of artisanal mining licences, inadequate compensation for host communities and limited benefits from gold exports as key challenges.Olanya called for a review of gold royalty and taxation arrangements, stronger oversight of mining agreements, increased investment in artisanal miners and greater value addition to ensure more wealth is retained within Uganda. He argued that natural resources are not delivering commensurate benefits to Ugandans, with a significant share accruing to foreign investors.Olanya also urged Bank of Uganda to purchase all gold mined in or transiting through Uganda, saying this would increase domestic retention of mineral wealth. He however emphasised that the central bank should be supported by a framework allowing it to trade in gold rather than merely accumulate reserves.Meanwhile, Jackline Ensekiriyo, Technical Officer at the Uganda Extractive Industries Transparency Initiative, highlighted persistent gaps in gold production and export data.She said artisanal and small-scale miners make a significant contribution to mineral production and employment but remain largely underrepresented in official employment statistics.Aloysious Kittengo, Tax Policy Analyst at SEATINI, also raised concerns about gaps in tax incentives, revenue mobilisation and accountability within the extractives sector.He questioned whether tax exemptions and incentives granted to mining companies were delivering adequate economic and social returns, particularly in light of concerns about human rights compliance and limited access to company data by government.-URNThe post Uganda Sitting on Gold but Earning Pennies: Experts Blame Weak Laws for Lost Billions appeared first on Business Focus.