Tanzania starts buying gold locally to shore up reserves

Tanzania has taken a significant step towards boosting its foreign exchange reserves by starting to buy gold locally, as announced by the Bank of Tanzania. This initiative, first unveiled in late August this year, aims to expand the country's holding of physical gold, which serves as a store of value and can help stabilize the national currency, ensuring smooth international transactions. In an exclusive interview with CNBC Africa, Ramadhan Kagwandi, CEO of Exodus Advisory, shed light on the details of Tanzania's gold procurement strategy. The Bank of Tanzania is purchasing gold from over-the-counter markets, with a target of acquiring approximately six tonnes of gold by the end of the year. This move presents incentives for local miners, including access to loans to facilitate the extraction process and support from refineries for smooth transactions. While the exact portion of gold in the Bank of Tanzania's reserves remains undisclosed, recent reports show the procurement of 418 kilograms of gold so far. This initiative could not only help Tanzania hedge against inflation and currency depreciation but also contribute to economic stability. By increasing gold reserves, the Central Bank aims to manage inflation expectations and stabilize the currency amidst global uncertainties. Other major gold producers in Tanzania, like Anglo Gold Ashanti and Barrick Gold, have seen a decrease in production output in recent years. However, changes in government policies and improved engagements with mining companies are expected to boost gold production in the country. With the government stimulating the gold business by directly purchasing locally sourced gold, Tanzania is hopeful for a resurgence in gold production and a strengthened position in the global market.