Tanzania mining regulator has directed all mining firms and gold traders to allocate at least 20 percent of their gold exports to the central bank. The move aims to diversify and bolster the foreign reserves of the Bank of Tanzania (BoT), as the country seeks to address depreciation pressures on its currency, the shilling.
The BoT began purchasing gold from local miners and traders in the last financial year, acquiring 418 kg of gold by June. The goal for the current financial year is more ambitious, with plans to buy 6 metric tonnes of gold to further strengthen its reserves.
New directive effective from October
The Tanzania Mining Commission announced on Friday that the new directive will come into force on October 1, as part of recent amendments to mining legislation. Miners and traders will be required to submit the allocated gold to two major mineral refineries: Eye of Africa Ltd in Dodoma, and Mwanza Precious Metals Refinery Ltd in Mwanza.
The statement from the regulator added that all payments for the gold would be handled in accordance with arrangements set by the Bank of Tanzania, though specific rates were not disclosed.
Strengthening economic stability
As of July, Tanzania’s foreign exchange reserves stood at $5.29bn, enough to cover 4.3 months of projected imports of goods and services. The decision to boost gold reserves is seen as a strategic step to maintain and strengthen the country’s economic stability in the face of currency fluctuations.
The directive comes amid broader economic challenges, including calls from opposition lawmaker Tundu Lissu for telecoms firm Tigo to address allegations regarding government tracking, adding to the politically charged environment in Tanzania.
Credit: Africabriefing
