A survey conducted amongst leaders of Artisanal and Small scale Mining (ASMs) Associations across Uganda indicates that the most pressing challenge ASMs have is inadequate access to affordable financing to fund their operations.
UG Mining Digest interviewed 40 ASM leaders from Karamoja, Eastern, Western, Central and Northern Uganda. The majority of them revealed that there was limited availability of affordable financing in their areas, and this was crippling their operations. The other key challenges were lack of appropriate mining equipment, lack of Personal Protective Equipment (PPE), poor infrastructure especially roads and persistent flooding of mining pits caused by heavy rains that the miners attribute to climate change.
“We don’t have any financing available to ASMs at the moment. We need access to credit to be able to grow as an association which in turn will increase our output and also increase our contribution to the economy,” says Elizabeth Byarugaba a member of the Uganda Association of Artisanal and Small scale Mining (UGAASM). “The Government should enable access to working capital and also allocate an annual budget of a revolving fund for ASMs.”
While many of the respondents revealed that they had plans to acquire equipment and grow their mining operations, they remained constrained by inadequate funds to achieve their dreams. “Mining is capital intensive,” says Bosco Bukya, the UGAASM Chairman. “We want to acquire modern equipment and move away from rudimentary tools. Our tools only allow us to extract 25% of the gold. We need machinery that will allow us extract at least 90%,” he says.
Like Ms. Byarugaba, Bukya too urges Government to set up a revolving fund that ASMs can tap into to finance their operations. “There should also be a revolving fund for ASMs that allows us borrow equipment and access loans. The Government should support us the same way they are supporting agriculture. The more we produce, the more they can earn.”
Some respondents acknowledged that the financing gap is being filled by some NGO and other Development Partners, but that is not enough. “We have three micro finance institutions here (in Gulu),” says Stuart Kidega, the Chairman of the Northern Region ASM Association. “They have been supporting us with loans but their loans are very small. They range between three hundred thousand to five million shillings, depending on your security,” he adds.
According to Mr. Kidega, such micro finance institutions should be able to lend out as much as twenty million shillings to the miners. “We need banks to get involved too. They are at least able to offer more than what micro finance institutions are offering,” he says.
Lack of affordable financing is driving the miners into unfair partnerships with loan shacks and middle men which has a huge impact on the their (miners’) profits. According to Josephine Aguttu from Busia, Government-led lending institutions can save them from this hazard. “This will help us avoid middle men who are exploiting us because they always give us money for extraction so we later sell the gold to them at a price they’ve dictated. This deprives us of the opportunity to sell to Indians who give more money,“ she argues.
