The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | NEWS CORRESPONDENT | Industry players have been urged to support the growth of Uganda’s mineral sector to unlock its potential through appropriate financing and investment options that will spur its growth and enable the country to attain its US$500 billion GDP target by 2040.
The call was made during the 15th Annual Mineral Wealth Conference held under the theme “Beneath the Surface: Unlocking Africa’s Next Mining Powerhouse” raising an important question: what must happen above the surface for Uganda to fully realise the value beneath it?
Minerals are a key pillar of the government’s tenfold growth strategy, ATMS (Agro-industrialization, Tourism, Mineral Development, and Science, Technology & Innovation)
Pearl Bank’s Chief Treasury & Markets Officer, Yunus Mugula mentioned that beyond what lies beneath the ground, there is another resource we must pay equal attention to: the estimated 500,000 Ugandan artisanal and small-scale miners extracting minerals, creating livelihoods and contributing to the broader economy.
He said, “The challenge is how we support them in formalizing into licensed and bankable enterprises connected to formal markets. That transition is very critical to unlocking immense value in the sector and contributing to socio-economic transformation.”
Speaking about the bank’s role in financing the mineral sector, Mugula noted that Pearl Bank through its Wendi mobile wallet already extends financial services to Artisanal & Small-scale Mining Cooperatives and their members. The Bank also provides trade-finance solutions including invoice discounting, contract financing, export and import finance, guarantees and letters of credit.
The Minister of State for Energy and Mineral Development, Hon. Sidronius Okaasai Opolot noted that the government will continue to prioritise the growth of the mineral sector and encouraged key players to invest in the different stages; from the mining to the value addition so that Uganda can export to the regional and other markets.
At the earliest stage, an operator may be prospecting, undertaking geological assessments and securing licenses. Conventional commercial bank debt may not be appropriate because cash flows are uncertain and the resources may not yet have been proven. Seed capital, grants, risk capital and government-supported programmes can play an important role.
Once a commercially viable resource has been established, the financing requirement changes. A miner may need to prepare the site, acquire excavators, crushers and processing equipment, recruit workers and meet environmental and regulatory requirements. Equipment finance, leasing, asset-backed lending and development finance become increasingly relevant.
As production begins, businesses need working capital to pay workers, purchase inputs, transport minerals and bridge the period between production and payment by customers. Trade finance, production loans and other short-term facilities can support this stage.
When an enterprise develops established buyers, export contracts and reliable production records, further financing possibilities emerge. Purchase-order financing, invoice discounting, supply-chain finance, letters of credit and off-take-backed structures can allow lenders to finance the transaction and its cash flows, rather than relying exclusively on traditional collateral.
“Uganda’s 500,000 artisanal and small-scale miners should therefore not be viewed as being on the margins of the mineral economy. They can become an important foundation of it.
For Pearl Bank, whose purpose is to foster prosperity for Ugandans, the opportunity is to work with government, miners and the wider ecosystem to help promising enterprises become increasingly formal, safe, productive and bankable,” Mugula concluded.
