On 1st October 2024, the Central Bank of Tanzania (BOT) launched its Domestic Gold Purchase Program with lower royalties and zero VAT, allowing gold sellers to sell their gold to the Bank at competitive world market prices.
The prices are subject to daily changes reflecting the world market prices as published by the Tanzanian Mining Commission.
The program’s payment terms entail 100% payment issued after the receipt of a confirmed fire assay report from an approved refinery, with payment processed within 24 hours and the BOT covering all the refining costs.
In terms of incentives, the program offers a reduced royalty fee of 4% instead of the usual 6%, no inspection fees (down from 1%), and a zero-rated VAT allowing sellers to claim input tax.
Under this arrangement, any mineral rights holder, licensed dealer, or refinery with an agreement with the BOT can sell any quantity of gold to the BOT.
BOT also reminded all mineral rights holders and licensed dealers that as per a provision in Section 59 of Tanzania’s Mining Act (Cap 123), 20% of minerals produced or purchased by any mineral rights holder or licensed dealer must be offered to the Government of Tanzania.
Commenting on the matter, Tanzania’s Minister of Minerals, Hon. Anthony Mavunde, explained that after discussions, the government and stakeholders reached an agreement on selling gold to the BOT was reached.
Hon. Mavunde urged all stakeholders to cooperate with the government in the initiative to establish gold reserves through the BOT.
On his part, the Deputy Prime Minister and Minister of Energy, Dr. Doto Biteko, highlighted: “The system put in place by this Ministry provides a better environment for doing business than ever before in history. Support the government’s efforts, as gold reserves will help us strengthen our currency during times of economic turbulence.”
The Domestic Gold Purchase Program
Tanzania ranks fourth in gold production in Africa but does not have sufficient reserves of gold in its central bank.
Gold diversifies the bank reserves, provides an additional layer of security when foreign exchange reserves fluctuate, and acts as an alternative currency.
The bank can sell gold to stabilize the economy when a drop in the value of Tanzania shillings occurs.
For this, it aims to have adequate gold reserves through the domestic gold purchase program using Tanzania Shillings.
