Uganda’s mining sector needs more innovative financing and investment if the country is to unlock its mineral wealth and achieve its target of growing the economy to $500 billion by 2040, Pearl Bank has said.
The call was made during the 15th Annual Mineral Wealth Conference in Kampala, held under the theme “Beneath the Surface: Unlocking Africa’s Next Mining Powerhouse.”
The conference brought together players in the mining industry to discuss how Uganda can turn its mineral resources into sustainable economic growth, jobs and investment.
Mineral development is one of the key pillars of the government’s tenfold growth strategy, alongside agro-industrialisation, tourism, and science, technology and innovation.
Pearl Bank Chief Treasury and Markets Officer Yunus Mugula said Uganda’s mining potential goes beyond the minerals beneath the ground and includes the hundreds of thousands of people who depend on the sector for their livelihoods.
Mugula said an estimated 500,000 Ugandans are engaged in artisanal and small-scale mining, making them 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 is already supporting artisanal and small-scale mining cooperatives and their members through its Wendi mobile wallet.
The bank also offers trade-finance facilities, including invoice discounting, contract financing, export and import finance, guarantees and letters of credit.
Mugula said financial institutions need to develop financing solutions that match the different stages of a mining business instead of relying on conventional lending models.
At the exploration stage, for example, miners may be conducting geological assessments, prospecting for minerals and securing licences, while their future cash flows remain uncertain.
He said seed capital, grants, risk capital and government-backed programmes can therefore help businesses at this stage.
Once a commercially viable mineral resource has been established, miners require capital to prepare sites, acquire excavators, crushers and other processing equipment, employ workers and meet environmental and regulatory requirements.
According to Mugula, equipment finance, leasing, asset-backed lending and development finance can help businesses meet these requirements.
As production starts, miners need working capital to pay workers, purchase inputs, transport minerals and meet other operational costs while waiting for payment from buyers.
Trade finance, production loans and other short-term facilities can help bridge this gap.
Mugula said established mining companies with reliable buyers, export contracts and production records can access more financing options.
These include purchase-order financing, invoice discounting, supply-chain finance, letters of credit and off-take-backed financing.
Such financing structures, he said, allow lenders to focus on the underlying transaction and expected cash flows rather than relying solely on traditional collateral.
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 urged investors and other industry players to invest across the mining value chain, from exploration and extraction to processing and value addition.
Opolot said developing the sector would enable Uganda to increase mineral production and access regional and international markets.
Mugula said artisanal and small-scale miners should not be treated as peripheral players in the mining industry.
“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.
“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.”
