Earlier this week, Ugandan officials announced the country’s central bank has begun to buy gold from domestic producers to bolster its reserves.
Uganda is one of several African central banks, including Kenya, Nigeria, and the Congo, that are buying domestic gold to expand national holdings and diversify their reserves.
The Bank of Uganda announced the program nearly two years ago. According to a statement from the central bank, it made its first domestic gold purchase last Friday (April 17) and will continue buying gold under a 3-year pilot program.
Uganda’s mining sector is relatively small, ranking 20th in Africa, with gold production dominated by small wildcat operations. However, Uganda has emerged as a major gold exporter as it processes and refines gold mined elsewhere. In 2025, the country exported $5.8 billion in gold, a 76 percent increase year-on-year.
When announcing the domestic gold-buying program, a Bank of Uganda statement said that buying gold from small-scale local producers would also “be supporting the livelihoods of artisanal and small-scale miners, and this has positive spill-over effects on other sectors of the economy.”
Bank officials did not reveal how much gold it bought or how much it paid.
According to the Bank of Uganda statement, the gold-buying program is intended 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.”
Uganda has struggled to maintain its foreign exchange reserves due to rising external debt payments and difficulties buying foreign currency, such as dollars, due to its own currency’s devaluation.
BoU officials also indicated the domestic gold-buying program "will strengthen reserve adequacy and reduce risks associated with conventional reserve instruments."
By conventional reserve instruments, the bank means dollars and dollar-denominated assets.
In fact, a large number of central banks are growing their gold reserves to diversify away from the greenback. Wall Street has even come up with a fancy term for this de-dollarization trend – the debasement trade.
In a nutshell, as the dollar (along with other fiat currencies) depreciates, central banks and other institutions are dumping them for a “more neutral” safe haven.
That neutral safe haven is gold. It is money without counterparty risk.
There are two overriding concerns surrounding the dollar.
First, there is the U.S. government fiscal malfeasance. Uncle Sam spends hand over fist, adding trillions to its pile of debt every year, and there doesn’t seem to be much interest in slowing down the spending train.
Second, dollar worries were exacerbated after the U.S. and its Western allies effectively locked Russia out of the dollar-driven global financial system and froze billions in Russian assets. This weaponization of the dollar has made many countries wary of holding the greenback.
According to a World Gold Council survey in 2023, a “substantial share” of central banks expressed concern about potential sanctions after the U.S. and other Western countries froze almost half of Russia’s $650 billion gold and forex reserves.
Aware of these risks, many countries in Africa and elsewhere are looking for ways to diversify their reserves and minimize dependence on the dollar. Gold is the perfect solution as it carries no counterparty risk and is recognized as money worldwide.
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