The African Gold Refinery (AGR), established in 2014, is a prominent gold refining facility located in Entebbe, Uganda. As East Africa’s first refinery of its kind, AGR has played a significant role in the region’s gold industry. However, its operations have been marred by controversies, particularly concerning the sourcing of gold from conflict-prone areas.

Establishment and Operations

AGR was inaugurated in 2017, with Ugandan President Yoweri Museveni officiating the ceremony. The refinery, valued at $15 million, was primarily owned by Belgian investor Alain Goetz. Despite Uganda’s limited domestic gold production, the country’s gold exports have surged in recent years, with AGR refining gold imported mainly from neighboring countries like the Democratic Republic of Congo (DRC) and South Sudan.

Controversies and Allegations

AGR has faced significant scrutiny over allegations of sourcing gold from conflict zones. In 2022, the U.S. Department of the Treasury sanctioned Alain Goetz and AGR, accusing them of involvement in the illicit movement of gold valued at hundreds of millions of dollars per year from the DRC. The Treasury Department highlighted that more than 90% of the DRC’s gold was smuggled to neighboring countries, including Uganda, where it was refined and exported to international markets.

Further investigations revealed that AGR was reluctant to disclose its suppliers, raising concerns about the legality of its gold sources. A United Nations report indicated that AGR received gold worth over $3 million from a supplier in Bukavu, DRC, who had no prior experience in the gold trade, suggesting potential smuggling activities.

Impact on Uganda’s Gold Trade

The controversies surrounding AGR have had broader implications for Uganda’s gold industry. The country’s gold exports have risen sharply, becoming its second-leading export commodity after coffee. However, the lack of transparency and potential involvement in illicit activities have raised concerns about revenue losses and the ethical implications of the gold trade. Reports indicate that Uganda’s gold sector is shrouded in mystery, with questions about who truly benefits from the trade and whether the right taxes are being paid.

Government Response and Regulatory Challenges

The Ugandan government has faced challenges in regulating the gold sector effectively. Discrepancies between export permits issued by the Directorate of Geological Surveys and Mines (DGSM) and actual exports reported by the Uganda Revenue Authority (URA) have been noted. For instance, in the fiscal year 2016/2017, DGSM issued permits for only 16.281 kilograms of gold, while URA records showed exports of 8,691 kilograms, indicating potential revenue losses from undeclared gold exports.

Conclusion

The African Gold Refinery’s establishment marked a significant development in Uganda’s gold industry. However, the subsequent controversies highlight the complexities and challenges in ensuring ethical and transparent practices in the gold trade, especially in regions plagued by conflict and weak regulatory frameworks.