Tanzania’s mining regulator has mandated gold sellers to sell at least 20% of their output to the central bank to boost gold reserves and stabilize the currency. The country’s stock market saw a 22% rise in capitalisation from January to September, supported by strong performances in banking and beverages while government bonds also gained value. Notably, various companies experienced significant stock fluctuations during this period.
The Tanzanian mining authority has mandated that all gold mining firms and traders must sell a minimum of 20% of their gold to the central bank, following new mining regulations that took effect in October. This initiative aims to diversify the Bank of Tanzania’s (BoT) foreign exchange reserves, responding to pressures on the local currency.
The BoT’s gold acquisition program, which began last year, aims to address challenges with the Tanzanian shilling. In the past year, the BoT effectively purchased 418 kilograms of gold and is now targeting six metric tons in the current financial year to further strengthen reserves.
Gold miners are required to sell their gold to two primary refineries: Eye of Africa Ltd in Dodoma and Mwanza Precious Metals Refinery Ltd in Mwanza. This measure is taken as Tanzania’s foreign exchange reserves are currently at $5.29 billion, allowing for around 4.3 months of imports amid an 8% depreciation of the shilling against the US dollar this year.
With Tanzania being one of Africa’s leading gold producers—home to major companies like AngloGold Ashanti and Barrick Gold—the gold export sector has historically been integral to the national economy, driving significant foreign exchange earnings. Increased restrictions and systematic reforms have been enforced by the government to boost the mining sector’s economic contribution.
In conjunction, the Tanzanian stock market saw a considerable 22% increase from January to September 2024, expanding from $5.86 billion to $7.13 billion, attributed to heightened investor confidence and strong performance in sectors such as banking and beverages. The domestic market capitalization also saw a rise of 7% during the same timeframe.
The bond market remained active, with outstanding government bond values experiencing an 18.5% rise, from $8.12 billion to $9.62 billion. However, the sustainable bonds market has stagnated at $184.03 million, revealing potential growth avenues for investors.
Several companies experienced notable stock price changes in the first nine months of 2024. For example, CRDB Bank’s stock rose by 39.13%, and East African Breweries Limited saw an increase of 82.97%. Conversely, Swissport Tanzania faced a decline in its stock price by 16.67%, attributed to heightened competition in the aviation sector.
Tanzania’s recent regulations mandating gold sales to the central bank aim to stabilize its currency and bolster foreign exchange reserves. The mining sector’s reforms and a thriving stock market reflect growing investor confidence. The developments signify a strategic move by the Tanzanian government to strengthen the economy through increased gold reserves and improved market performance.
Original Source: www.zawya.com
