Uganda’s central bank has begun purchasing gold from domestic producers as part of a new strategy to strengthen and diversify its foreign exchange reserves.
The Bank of Uganda announced on Tuesday that it had made its first gold purchase on Friday under a programme introduced two years ago. However, it did not disclose the value of the transaction.
According to the central bank, the initiative will run as a three-year pilot programme aimed at incorporating domestically sourced gold into Uganda’s official foreign reserves.
“The Programme aims to build and diversify Uganda’s foreign exchange reserves portfolio by purchasing and processing domestically mined gold and including it in the foreign exchange reserves,” the Bank of Uganda said in a statement.
“This will strengthen reserve adequacy and reduce risks associated with conventional reserve instruments.”
The move marks a significant shift in reserve management strategy, as Uganda joins a growing number of African countries exploring gold-backed reserves to reduce exposure to currency volatility and global financial shocks.
Countries such as Kenya and the Democratic Republic of the Congo have also announced similar efforts to increase gold holdings in their foreign reserves.
Uganda has in recent years emerged as a major regional hub for gold processing and trade. According to trade data, the country exported about $5.8 billion worth of gold last year, representing a 76 per cent increase compared to 2024.
Despite the surge in exports, domestic production is still largely driven by small-scale and informal miners, who continue to dominate the sector.
Officials say the new policy could help formalise parts of the gold supply chain while also increasing the country’s control over strategic mineral resources.
Economists note that gold-backed reserves are often used by central banks to hedge against inflation, currency depreciation, and global financial instability.
By integrating locally sourced bullion into its reserves, Uganda is aiming to build a more resilient financial buffer and reduce dependence on conventional reserve assets such as foreign currencies and government securities.
The pilot programme will also test the central bank’s capacity to purchase, process, and store gold at scale before any long-term expansion of the initiative is considered.
