Tanzania has asked gold exporters in the country to contribute to strengthening its foreign reserves.
According to Reuters, Tanzania’s mining regulator has instructed all gold-exporting mining companies to set aside a minimum of 20% of their gold for the Central Bank of Tanzania (BoT).
This measure aims to support the bank’s initiative to diversify its foreign reserves.
The apex bank began purchasing gold from local traders and miners in the previous fiscal year, which ended in June, to boost its reserves in response to the depreciation of the local currency, the shilling.
During the year ending in June, the central bank reportedly bought approximately 418kg of gold to enhance its reserves and now plans to increase the purchase to 6 metric tons of gold.
On Friday, Tanzania’s Mining Commission announced a new mining regulation, effective October 1, which will require gold merchants to deliver 20% of their gold to two approved refineries: Eye of Africa Ltd in Dodoma and Mwanza Precious Metals Refinery Ltd in Mwanza. “All payments will be made in accordance with the Bank of Tanzania arrangements,” the statement said.
Tanzania is a major gold market in East Africa and has strong trade ties with neighbouring countries. The gold trade contributes about 4% to its GDP.
Gold mining is a significant source of employment and foreign exchange earnings for the country. In July, it was reported that Tanzania had become Uganda’s primary source of gold imports within the East African Community (EAC).
This was a result of Uganda’s over $3 billion gold trade, in which Uganda often purchases raw gold and sells the refined product. According to the Ministry’s June Performance of the Economy report, Tanzania supplied 83% of all EAC products sourced by Uganda in the year prior to May, amounting to Shs1.6 trillion out of Shs1.9 trillion in EAC imports.