Industry players have been urged to support the growth of Uganda's mineral sector to unlock its potential through appropriate financing and investment options. This call was made during the 15th Annual Mineral Wealth Conference held under the theme "Beneath the Surface: Unlocking Africa's Next Mining Powerhouse". The conference raised 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.
Pearl Bank's Chief Treasury & Markets Officer, Yunus Mugula, mentioned that beyond what lies beneath the ground, there is another resource that needs equal attention: the estimated 500,000 Ugandan artisanal and small-scale miners extracting minerals. These miners create livelihoods and contribute to the broader economy. However, the challenge is how to support them in formalizing into licensed and bankable enterprises connected to formal markets. Mugula emphasized that this transition is 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. This support enables miners to access the necessary funds to grow their businesses and contribute to the economy.
The Minister of State for Energy and Mineral Development, Hon. Sidronius Okaasai Opolot, noted that the government will continue to prioritize the growth of the mineral sector. He encouraged key players to invest in the different stages, from mining to value addition, so that Uganda can export to regional and other markets. The government's support is crucial in creating an enabling environment for the sector to grow.
At the earliest stage of mining, an operator may be prospecting, undertaking geological assessments, and securing licenses. Conventional commercial bank debt may not be suitable due to uncertain cash flows and unproven resources. Alternative financing options, such as seed capital, grants, risk capital, and government-supported programs, can play an important role in supporting miners at this stage.
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, including purchase-order financing, invoice discounting, and supply-chain finance.
Mugula concluded that Uganda's 500,000 artisanal and small-scale miners should 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 the government, miners, and the wider ecosystem to help promising enterprises become increasingly formal, safe, productive, and bankable.
Key points
- The Ugandan government aims to achieve a $500 billion GDP target by 2040, with the mineral sector playing a key role.
- Pearl Bank is providing financial services to artisanal and small-scale miners through its Wendi mobile wallet and trade-finance solutions.
- The government and industry players must work together to support the growth of the mineral sector and unlock its potential.
