UGANDA is the latest African nation to turn to gold to back up its currency after it set out plans for domestic purchases of the precious metal, said Bloomberg News.
By buying gold, Uganda aims to build foreign exchange reserves and limit risks on reserve investments, the newswire said.
The Bank of Uganda will also directly purchase bullion from artisanal miners which will support government efforts to support local miners and reduce imports of raw gold.
“The gold purchase program aims at mitigating the declining foreign currency reserves and address the associated risks in the international financial markets,” the Bank of Uganda said in a report posted on its website.
“By purchasing gold directly from the artisanal miners, the BOU will also be supporting the livelihoods of artisanal and small-scale miners, and this has positive spill-over effects on other sectors of the economy.”
Nigeria’s central bank is to buy all locally produced gold to shore up reserves and fight inflation while in April Zimbabwe launched its ZiG currency – short for Zimbabwe Gold – backed by 2.5 tons of the precious metal.
Ghana, Africa’s second-largest bullion producer, previously told big miners to sell 20% of what they refine to the central bank.
African nations are battling heavy debt levels and eye-watering interest rates as they seek to revive their economies following the Covid-19 pandemic and the rocketing inflation that ensued, exacerbated by the fallout from Russia’s invasion of Ukraine, said Bloomberg.
