TANZANIA BOOSTS GOLD RESERVES WITH DOMESTIC PURCHASE PROGRAMME

In a strategic move to bolster its gold reserves and stabilize the national economy, Tanzania has implemented a comprehensive domestic gold purchase program. Tanzania's central bank, the Bank of Tanzania (BoT) has allocated one trillion shillings (approximately $400 million) for this initiative, aiming to acquire six metric tons of gold annually. ​

BoT has acquired two tonnes of gold since July 2024 as part of this domestic gold purchase programme, which targets six tonnes annually. The initiative, launched in October 2024, aims to diversify foreign exchange reserves and support the Tanzanian shilling.

BoT Financial Analyst Dunga Nginilla highlighted that initial challenges, such as excessive documentation and bureaucracy, slowed progress. However, reforms—including streamlined procedures, reduced paperwork, and new legislative measures—have boosted participation. The BoT now offers world market prices, full payments within 24 hours of refining, and covers refining costs, making it attractive for sellers.

Additionally, effective October 1, 2024, the Tanzania Mining Commission mandated that all mining firms and gold traders exporting the precious metal must reserve at least 20% of their production for sale to the central bank. This initiative not only aims to enhance the central bank's gold reserves but also seeks to empower local miners by providing them with a reliable and lucrative market. This directive is part of the newly enacted mining law designed to diversify and strengthen the BoT's foreign reserves amid pressures on the local currency, the shilling.

Incentives such as reduced royalty fees (from 6% to 4%), exemption from a 1% inspection fee, and zero-rated VAT further increase profitability for miners. Additionally, the government has allocated 250 billion shillings ($100 million) as part of a loan guarantee scheme to support mineral buyers, especially small-scale miners.

As Africa’s fourth-largest gold producer, Tanzania is experiencing growth in gold production, reaching 60 metric tonnes in 2024, up from 55 metric tonnes in 2023.

By strengthening its gold reserves, Tanzania aims to mitigate economic disruptions, stabilize the national currency, and reduce reliance on foreign currencies. This strategic reserve serves as a safeguard against global economic fluctuations, ensuring long-term economic stability and growth for the nation.