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Uganda: New law to regulate construction minerals underway

Umito October 30, 2024

Kampala — The Ugandan government has completed the drafting of the Construction Substances Bill, which will soon be submitted to Cabinet for approval, according to Irene Bateebe, permanent secretary in the Ministry of Energy and Mineral Development.

The bill seeks to establish regulatory oversight of the mining and sale of non-metallic materials, often referred to as development minerals, such as sand, clay and murram, which are essential to the construction sector.

Historically, these resources fell outside the mineral regulatory framework, leading to environmental degradation and loss of revenue opportunities, Bateebe said.

The proposed legislation aims to close this gap by requiring licensing for companies involved in the extraction of these materials and introducing standards to protect the environment while meeting the requirements of the construction sector.

Bateebe revealed the development during an event organized by the United Nations Development Program (UNDP) at the Fairway Hotel on October 25.

UNDP Resident Representative in Uganda, Nwanne Vwede-Obahor, welcomed the new regulatory initiatives but highlighted the need to address the financing challenges facing Uganda’s artisanal and small-scale mining (ASM) enterprises.

The meeting, in collaboration with the Ministry of Energy and Mineral Development and the Uganda Chamber of Mines and Petroleum, highlighted a shared commitment to sustainable growth for small-scale miners, who are essential to the landscape Ugandan economy.

Vwede-Obahor highlighted the importance of recognizing developmental minerals – everyday materials like limestone and clay – which make up 84 percent of global mineral production and are essential for sectors such as construction, agriculture and manufacturing industry.

“The potential of the sector to generate employment and reduce poverty is critical given that the ASM sector employs almost 400,000 Ugandans and contributes over $350 million annually to the economy,” she said. declared.

Financial difficulties

However, Uganda’s ASM sector faces serious financial hurdles. Limited access to traditional banking services, high interest rates and insufficient collateral options create a significant financing gap.

Vwede-Obahor highlighted the importance of “reducing financing risks” for these companies, advocating for a favorable financial ecosystem that includes tailored products, capacity building for miners and supportive policies to improve access to funding.

Together with the European Union, UNDP is working to address these challenges through initiatives under the ACP-EU Development Minerals Programme.

This includes training miners in sustainable practices, establishing more than 100 mining associations, and partnering with financial institutions to develop affordable financing options such as credit guarantees and risk-sharing mechanisms.

During the meeting, representatives from various sectors, including the Ministry of Finance and local financial institutions, engaged in discussions on supporting ASM businesses. Strategies explored included improving miners’ financial literacy, encouraging regulatory frameworks that facilitate access to credit, and formalizing mining operations to build credibility.

Empower miners

Vwede-Obahor urged stakeholders to come together to empower small-scale miners. This collaboration, she said, is essential to fostering a resilient economy that benefits both the sector and the communities it serves.

In Uganda, the development minerals sector forms the cornerstone of various economic activities, from construction to agriculture.

The artisanal and small-scale nature of mining means that more than 80% of development mineral production relies on labor-intensive practices. However, a recent baseline assessment highlighted significant funding challenges, particularly for women and vulnerable groups within the ASM workforce.

Growth opportunities lie in access to low-cost financing tailored to ASM’s needs. With interest rates often prohibitive, many operators are unaware of formal financing options. Their needs range from small machines costing between $3,000 and $8,000 to operational capital for production.