Industry players have been urged to increase financing and investment in Uganda’s mining sector to unlock the country’s mineral wealth and support its ambition of building a US$500 billion economy 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.”
Speaking at the conference, Yunus Mugula, Pearl Bank’s Chief Treasury and Markets Officer, said Uganda’s mineral potential should be viewed alongside the estimated 500,000 artisanal and small-scale miners engaged in mineral extraction across the country.
Mugula said helping these miners formalise their operations, acquire licences and develop bankable businesses linked to formal markets would be key to generating greater value from the sector.
“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,” Mugula said.
Mineral development is among the pillars of the Government’s ATMS strategy, alongside agro-industrialisation, tourism, and science, technology and innovation.
Financing across the mining value chain
Mugula said financial institutions have an important role to play at different stages of the mining value chain because the financing needs of a mining business change as it moves from exploration to production and eventually into established markets.
During the early stages, companies may be involved in prospecting, geological surveys and licensing. At this point, accessing conventional bank financing can be difficult because cash flows are limited and the commercial viability of the mineral resource may not yet be certain.
He said seed capital, grants, risk capital and government-backed programmes could help mining enterprises overcome these early-stage financing challenges and move towards commercial viability.
Once a viable mineral resource has been confirmed, miners require capital for site preparation, machinery such as excavators and crushers, processing facilities, labour, as well as meeting environmental and regulatory requirements.
Mugula said equipment financing, leasing, asset-backed lending and development finance could provide suitable options at this stage.
As mining operations move into production, businesses also need working capital to pay workers, purchase inputs, transport minerals and bridge the period between production and receiving payments from customers.
He said trade finance, production loans and other short-term financing facilities could help businesses meet these needs.
For established mining companies with consistent production, reliable buyers and export contracts, Mugula said financing options could widen to include purchase-order financing, invoice discounting, supply-chain finance, letters of credit and off-take-backed financing structures.
Pearl Bank’s financing role
Mugula said Pearl Bank is already providing financial services to artisanal and small-scale mining cooperatives and their members through its Wendi mobile wallet.
The bank also provides trade-finance solutions such as invoice discounting, contract financing, export and import finance, guarantees and letters of credit.
He said the focus should be on helping mining enterprises move from informal operations into safer, more productive and bankable businesses.
“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,” Mugula said.
He added that Pearl Bank intends to work with Government, miners and other stakeholders across the mining ecosystem to support the formalisation and growth of promising mining enterprises.
Government backs value addition
The Minister of State for Energy and Mineral Development, Sidronius Okaasai Opolot, said Government would continue to prioritise the development of the mineral sector.
He encouraged investors and other industry players to participate throughout the value chain, from mineral extraction to processing and value addition.
Opolot said this would enable Uganda to supply regional and international markets with higher-value mineral products.
The conference discussions underscored the importance of matching financing to the different stages of mineral development as Uganda seeks to increase the sector’s contribution to economic transformation.
For financial institutions, the expanding mining industry presents an opportunity to develop financial products that respond to the specific needs of exploration, production, processing and mineral trade.
For miners, formalisation and stronger relationships with financial institutions could improve access to capital and markets while supporting the transition to more structured and sustainable businesses.
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