KAMPALA — Industry players have been urged to expand financing and investment in Uganda’s mineral sector to support formalisation, value addition and the growth of enterprises that could contribute to the country’s target of a US$500 billion economy by 2040.
The call was made during the 15th Annual Mineral Wealth Conference at Speke Resort Munyonyo, held under the theme “Beneath the Surface: Unlocking Africa’s Next Mining Powerhouse.”
Pearl Bank Chief Treasury and Markets Officer Yunus Mugula, who participated in a panel discussion on formalisation pathways, access to finance, safety standards and market linkages for artisanal and small-scale miners, said Uganda’s estimated 500,000 artisanal and small-scale miners represent an important part of the country’s mineral economy.
“The challenge is how we support them in formalising 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,” Mugula said.
He said Pearl Bank was already providing financial services to artisanal and small-scale mining cooperatives and their members through its Wendi mobile wallet.
The bank also offers trade-finance products, including invoice discounting, contract financing, export and import finance, guarantees and letters of credit, he said.
Mugula said financing requirements vary according to the stage of a mining enterprise’s development, and urged financial institutions to consider products suited to the risks and cash flows at each stage.
At the exploration stage, operators may require seed capital, grants, risk capital and government-supported programmes because mineral deposits may not yet have been proven and cash flows remain uncertain.
Once a commercially viable resource has been established, miners may require financing to prepare sites, acquire equipment and meet environmental and regulatory requirements. Mugula said equipment finance, leasing, asset-backed lending and development finance could become relevant at this stage.
As production begins, enterprises require working capital to pay workers, purchase inputs, transport minerals and bridge the gap between production and payment by buyers. Production loans and trade-finance facilities can help meet those needs.
For enterprises with established buyers, export contracts and reliable production records, Mugula said financing could increasingly be linked to transactions and future cash flows.
“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,” he said.
The Minister of State for Energy and Mineral Development, Sidronius Okaasai Opolot, said the government would continue prioritising the growth of the mineral sector and called on investors to participate across the mining value chain.
He encouraged investment not only in extraction but also in mineral processing and value addition, which he said could enable Uganda to access regional and international markets.
Mineral development is among the priority areas under the government’s tenfold growth strategy, alongside agro-industrialisation, tourism, and science, technology and innovation.
Mugula said the country’s artisanal and small-scale miners should not be viewed as operating on the margins of the formal economy.
“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,” he said.
He said Pearl Bank’s role was to work with government, miners and other sector players to help mining enterprises become more formal, safe, productive and bankable.
“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 said.
The 15th Annual Mineral Wealth Conference brought together stakeholders in Uganda’s mining industry to discuss ways of increasing investment, improving the sector’s contribution to the economy and unlocking the value of the country’s mineral resources.