Dar es Salaam – The Bank of Tanzania (BoT) is making substantial strides in its gold reserve initiative, optimistic about meeting its annual target of six tonnes through a series of strategic incentives.
One major incentive involves offering premium prices, aimed at encouraging both large- and small-scale miners to sell all of their gold directly to the central bank. Since the program’s inception last October, BoT has successfully acquired more than two tonnes of gold.
Dunga Nginilla, a financial analyst at BoT, discussed potential investment strategies that may be implemented as the gold reserves increase. These strategies may encompass gold deposits, swaps, leasing, and other gold-related investments. “Our target for this year is set, but going forward, we will assess risks to determine the potential for investment expansion,” he stated, noting that larger acquisitions are anticipated as inflows rise.
The gold acquisition strategy is designed to not only enhance national reserves but also diversify foreign exchange holdings. This initiative supports local miners by facilitating direct purchases of gold, ensuring ethical sourcing and the exclusion of conflict minerals and child labor.
Since the program’s launch, BoT has actively engaged in purchasing locally mined gold, ensuring appropriate registration and certification through the Mining Commission. Purity verification is conducted by reputable local refineries before submission to BoT, ensuring that pricing is aligned with current London Bullion Market rates.
The bank initially faced hurdles in gold acquisition due to payment delays. However, the governor has streamlined processes, ensuring transactions are completed within 24 hours. To attract further participation from miners, BoT has introduced VAT exemptions, foreign trade incentives, and premium pricing for unrefined gold.
In line with export regulations, miners are required to sell 20% of their gold exports to BoT, strengthening the central bank’s position as the preferred buyer. BoT emphasizes that foreign reserves are vital for Tanzania’s economic stability, supporting foreign payments, currency stabilization, and generating revenue through strategic investments.
These reserves also enhance investor confidence by reinforcing the country’s financial standing, acting as buffers during economic crises, and facilitating trade, while also supporting monetary policies. BoT ensures that its reserves achieve a purity of 99.5% to 99.9%, thus maximizing investment returns and bolstering Tanzania’s status as a key player in the gold market.
Looking to the future, BoT is committed to enhancing national objectives by strengthening local refineries for certification and addressing financing challenges faced by gold sellers. The bank continues to work toward reducing bureaucratic hurdles to streamline gold operations, maintain competitive pricing, and improve tax incentives to entice more local sellers.
