Dar es Salaam. The Bank of Tanzania (BoT) Monday announced the commencement of the Domestic Gold Purchasing Programme aimed at bolstering foreign exchange reserves in the East African nation through acquiring and holding gold.

Monday’s announcement comes almost six months after the government announced a process to launch a gold reserve in the country, with the then Minister of Minerals Doto Biteko informing the parliament on April 28, 2023, that the regulation for gold purchases is ready.

In its announcement, BoT said it would buy gold from domestic miners and traders in Tanzanian shillings.

In a BoT video shared on YouTube, the central bank’s governor, Emmanuel Tutuba, said the bank has so far bought 418kg of gold, with the plan being to buy six tonnes of the precious metal in 2023 alone.

Mr Tutuba said BoT sold the 418kg of gold to get US dollars to strengthen the country’s economy, adding that the bank had in its reserve other gold as part of its efforts to diversify Tanzania’s foreign currency reserve.

“The government, in its [2023/2024] budget, has set aside money to buy gold, and in this year [of 2023], we are planning to buy six tonnes of gold,” Mr Tutuba said in the video posted on September 22, 2023.

Mr Tatuba spoke after finalising his tour of two gold refineries, Geita Gold Refinery and Mwanza Precious Metals Refinery, located in Geita and Mwanza, respectively.

“The main aim was exploring the best way with which the BoT can buy more gold,” the governor said. “We have launched a procedure to support the country’s mineral sector to increase our exports and gain more foreign currencies.”

He said the BoT is now discussing with the State Mining Corporation (STAMICO) to find ways with which the two can partner to build capacity among artisanal miners across the country so that they can produce more gold, which the bank could buy.

“When BoT buys this gold, it takes it to the international market and sells it to get US dollars to increase their availability in the local economy,” Mr Tutuba said.

Tanzania revived its National Gold Reserve after nearly fifteen years of closure.

On June 13, 2021, when President Samia Suluhu Hassan was launching a gold refinery in Mwanza, she hinted that the refinery would enable the Central Bank to start buying gold in accordance with the law, thus enabling the country to have its own gold reserve.

Samia’s announcement came as there was a growing appetite among central banks to expand their gold reserves.

According to reports from the World Gold Council, central banks collectively purchased 125 tonnes of gold in January and February.

Additionally, a report by the Financial Times stated that an annual poll of 83 central banks indicated that two-thirds of the respondents thought that their peers would increase their gold holdings by 2023, with the majority citing geopolitical risk as the primary concern.

Gold accounts for at least one-third of Tanzania’s exports and is considered one of its strongest currency stabilisation export products.

In the financial year 2021/22, gold accounted for approximately 25 per cent of Tanzania’s exports.