Pearl Bank’s Chief Treasury & Markets Officer, Yunus Mugula (2nd R), among other speakers during the 15th Annual Mineral Wealth Conference
HABARI DAILY I Kampala, Uganda I Pearl Bank Uganda, formerly PostBank Uganda, is expanding its support for Uganda’s mineral sector by providing tailored financial services to artisanal and small-scale miners while advocating for their formalisation into licensed and bankable enterprises.
The bank says the estimated 500,000 artisanal and small-scale miners operating across the country should be viewed as an important part of Uganda’s mineral economy rather than as players on its margins.
Pearl Bank Chief Treasury and Markets Officer Yunus Mugula said the sector requires increased investment and financing suited to the different stages of mining operations if Uganda is to unlock the value of its mineral resources and achieve its target of a US$500 billion economy by 2040.
He made the remarks during the 15th Annual Mineral Wealth Conference, held under the theme, “Beneath the Surface: Unlocking Africa’s Next Mining Powerhouse.”
The conference examined what must happen above the surface for Uganda to fully realise the economic value of its mineral wealth.
Mineral development is one of the pillars of the government’s Tenfold Growth Strategy, alongside agro-industrialisation, tourism, and science, technology and innovation.
Wendi brings financial services to miners
Mugula said Pearl Bank is already supporting artisanal and small-scale mining cooperatives and their members through its Wendi mobile wallet, which provides access to financial services, savings and digital financial transactions.
The digital platform is intended to extend financial inclusion to miners who may otherwise face difficulties accessing conventional banking services.
Beyond digital financial services, the bank provides trade-finance products designed to support mining enterprises across the value chain.
These include invoice discounting, contract financing, export and import finance, guarantees and letters of credit.
Such facilities can become increasingly important as mining enterprises move from production into established commercial relationships, allowing businesses to finance transactions and manage cash-flow requirements.
Bankable enterprises
Mugula said one of the major challenges facing the mineral sector is helping informal miners transition into licensed cooperatives and enterprises that can access formal markets and financial services.
“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,” he said.
Pearl Bank works with government ministries and development programmes to support this transition, with formalisation expected to make mining operations safer and more accessible to financial institutions.
Mugula said formalisation would also enable miners to build businesses capable of attracting appropriate financing and participating more effectively in the formal mineral value chain.
Financing must match the mining cycle
The financing needs of a mining enterprise vary depending on its stage of development, with conventional commercial debt not always suitable for businesses that are still prospecting or establishing the viability of a mineral deposit.
At the early stage, seed capital, grants, risk capital and government-supported programmes can help operators undertake geological assessments, prospecting and licensing.
Once a commercially viable resource has been established, miners require financing to acquire excavators, crushers and processing equipment, recruit workers and meet environmental and regulatory requirements.
At this stage, Mugula said equipment finance, leasing, asset-backed lending and development finance can become increasingly relevant.
As production starts, businesses require working capital to pay workers, purchase inputs, transport minerals and bridge the period between production and payment by customers. Trade finance and production loans can help address these requirements.
For enterprises with established buyers and reliable production records, products such as purchase-order financing, invoice discounting, supply-chain finance, letters of credit and off-take-backed structures can provide additional financing opportunities.
Investment across value chain
The Minister of State for Energy and Mineral Development, Sidronius Okaasai Opolot, said government would continue prioritising the growth of the mineral sector.
He encouraged investors and other players to invest across the entire value chain, from mining to value addition, to enable Uganda to expand mineral exports to regional and international markets.
Mugula said Pearl Bank’s role is to work with government, miners and other sector players to help promising enterprises become increasingly formal, safe, productive and bankable.
“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.
