African Gold Refinery (AGR) is considering exiting Uganda over what it calls “unfair competition”.
According to Alain Goetz, the company CEO, Uganda is no longer making business sense, as smugglers of raw gold go about their business with impunity; denying the law-abiding AGR the opportunity to engage in legitimate trade.
“We are the only certified gold refiner and exporter in Uganda, with a Manufacture Under Bond license from the Uganda Revenue Authority. While it took us 3 years to get this license because of the various requirements you need to have in place before it is granted, it has taken these smugglers less than a month to get one; allowing them to legally smuggle out raw gold, denying the country a lot in revenues while hurting our investment as well,” Goetz explains.
Goetz says his company had initially discouraged the export of raw gold since it was now able to refine it to the highest global standards, while paying royalties and taxes to the Ugandan government. The smugglers have however improved their trickery and are now exporting under the guise of being MUB operators, which they are not.
A Manufacture Under Bond (MUB) license refers to an incentive extended to manufacturers to import plant, machinery, equipment and raw materials tax free, for exclusive use in the manufacture of goods for export. It is meant to encourage manufacturers, both local and foreign, to manufacture for export within the country.
Before getting certified, any enterprise applying to be registered as an MUB operator must submit plans and location of the proposed bonded factory in relation to surrounding premises. The enterprise must demonstrate where the manufactured goods will be stored, have adequate security and meet several other health, safety and environment guidelines amongst other requirements.
An annual licenses fee is also expected to be paid by the licensee.
While, AGR, which refines gold to 99.99% for export, has met these stringent requirements, companies like Simba Gold Refinery and Bullion Gold Refinery, which are exporting raw gold at a 94%, have not, claims Mr Goetz.
Simba Gold’s directors are Mr. Jamnadas V. Lodhia aka Chuni and his sons Mr. Kunal Lodhia And Jitendra J. Lodhia, while Bullion Gold Refinery is owned by Sameer Bimji.
“These guys are getting all the benefits of an MUB operator yet they have not invested in anything to qualify them as one. Where is their factory for instance? Someone has been compromised and it is costing us,” he adds.
AGR, which opened in Uganda in February, 2017, is an over US$ 23 million establishment, employing about 75 people and paying millions of dollars in taxes. The company, which also has plans to open a Trading Desk in Uganda, is now considering closing shop completely and relocating to either Kigali, Rwanda where it is setting up a fabrication plant or Goma, in DR Congo.