How Gold Displaced Coffer as Top Earner

From 2025 to date, gold overtook coffee as Uganda’s top foreign earner, with the metal now taking center stage as Uganda’s leading export.

According to recent data released by Uganda’s Central Bank, gold exports surged by 75.8 percent in 2025. The bank reported that gold shipments generated $5.8 billion in export earnings in 2025, up from $3.3 billion in 2024.

Similarly, the Finance Ministry’s latest monthly Performance of the Economy report stated that the East African nation posted a surplus of $147.26 million in January 2026, reversing a $206.43 million deficit in December 2025 and a $215.28 million shortfall a year earlier.

Export volumes, according to the ministry, climbed from 3,873kg to 6,254kg, while average prices surged from about $80,000 per kilogram to over $140,000, pointing to the scale of the rally.

With the jump, gold has overtaken coffee to become the East African country’s largest export and primary source of foreign exchange, underscoring a significant shift in the country’s export profile.

Before the Gold Boom

Before this economic shift, the economy of Uganda had over the years been largely driven by coffee, which accounted for nearly 50% of the country’s merchandise export earnings valued at about valued at $12.7 billion. It was the basis upon which the foundation of the agricultural economy was laid. It contributed about 12-19% of the overall value of exports in recent decades.

This was the case even until as recently as 2018 to 2019, when coffee earned over four hundred million dollars, data from Uganda’s finance ministry revealed

According to the Uganda Coffee Development Authority (UCDA), the coffee industry has since been sustained through initiatives such as the government re-planting and support in areas like the distribution of free, disease-resistant, clonal coffee seedlings.

Others are private sector liberalisation, robust dominance and quality, sustainability and certification, as well as rising global demand and pricing. These initiatives helped the Ugandan economy to stay afloat before 2025, when gold took center stage.

Drivers/Causes of the Increase in Gold Export

Several factors have been identified as key drivers of the record increase in global bullion prices in Uganda.

One of the drivers is having a demand. This is an investment that is expected to retain or increase in value during periods of market turbulence, helping investors limit their exposure to losses. These investments can diversify an investor’s portfolio and may be beneficial in times of market volatility.

Added to this is the entry of new dealers in the gold market. These dealers have boosted the sector and its prices in significant ways. These include a significant capital increase, and expansion of the volume of gold in the country’s refining hub.

Their entry into the market also led to increased competition and a favourable tax regime. This incentivised them to offer more competitive prices to those who sell in the region.

Another driver of gold export that came with new dealers is the expansion of regional supply chains, as well as some interventions from the central bank.

Adam Mugume, the central bank’s executive director for research and economic analysis, said the export boom was partly due to soaring international prices, which attracted new participants into the gold trade and significantly expanded shipment volumes. “The attractive pricing environment has catalysed strong market participation,” Mugume told Reuters in an email, noting that new commercial entities have entered the sector and boosted export activity.

Apart from geopolitics, other factors such as fears of inflation, as well as the demand by investors for gold, also contributed to the surge in the price of the metal. This is because in times of uncertainty, gold often becomes the choice asset for investors who are looking for stability for their money.

Uganda’s export surge has also been supported by policy changes. The government eliminated export levies on gold, a move aimed at formalising artisanal production and strengthening the country’s competitiveness as a regional processing and trading hub.

According to Grace Nambatya, the surge is not unique to Uganda alone, but a global trend that surfaces whenever global markets are shaky, making gold shine. She adds, however, that Uganda is better positioned to gain more due to the fact that its capacity to refine and export is growing.

This growing capacity has ensured that Uganda is not only a domestic producer but a hub for regional trading and refining. The country refines and re-exports gold sourced from neighbouring states, including eastern Democratic Republic of Congo and South Sudan, a role that has expanded as compliance and logistics improve.

These and more created a perfect foundation for the gold boom.

Impact on the Agricultural Sector

With gold overtaking coffee as the leading export, the agricultural sector has been impacted both positively and negatively in several ways.

First, the Bank of Uganda and the Ministry of Finance intend to plough back these mineral revenues into reinvestment in critical sectors like agriculture. So, instead of relegating agriculture to the background, the state intends to use earnings from gold to subsidise farmers, distribute seedlings, and improve rural infrastructure, which will help protect farmers from unpleasant weather conditions and global fluctuations in the prices of crops.

Secondly, in terms of macroeconomics, sources like TrendzNAfrica and The Africa Media Group report that the massive surge in export revenues from gold has substantially strengthened the Ugandan Shilling and increased the country’s foreign exchange reserves. This macroeconomic stability benefits the agricultural sector by reducing import costs for essential farming inputs (such as fertilizers, machinery, and fuel) that are typically priced in foreign currencies.

Therefore, rather than viewing gold’s rise as a detriment to agriculture, Ugandan policymakers emphasize a dual-commodity approach. The government aims to protect rural agricultural livelihoods while simultaneously leveraging gold as a diversified source of foreign exchange to build a stronger national economy.

Challenges: Farmers in areas like the Karamoja region have reported issues of land loss and forced evictions arising from the expansion of large-scale mining operations and the proliferation of artisanal and small-scale mining. This has led to disputes in land ownership as well as inadequate compensation for displaced farmers.

Another challenge to the agricultural sector in Uganda, according to a World Bank report, is the degradation of the environment. Mining activities frequently contaminate soil and water sources. The use of toxic chemicals like mercury and cyanide in artisanal mining seeps into local irrigation and grazing lands, significantly reducing crop yields in affected agricultural communities.

In addition to the above, unpredictable weather, high input costs, and unstable crop prices have forced many young, able-bodied agricultural workers to abandon farming in search of immediate cash in artisanal gold mining. This brain drain deprives the agricultural sector of vital labour, leading to an acute labour shortage.

Daniel Kato, a policy researcher, says “gold is becoming central to Uganda’s export earnings,” adding that “the beneficiaries of gold are more concentrated than those of coffee, which sustains millions of households.” Important concerns regarding economic resilience and inclusion are brought up by this change.

In parts of the country’s west and central regions where the crop is grown on a large scale, this departure from the norm, where coffee led the economic life of the country, has become noticeable. Among farmers, there are complaints of price instability among farm inputs like fertilizers, as many complain of unexpected hikes, often at a geometric progression, against the slow pace of profit.

Risks: Dependence and Volatility

The country last year inaugurated its first large-scale gold mine, a $250 million, Chinese-owned project in eastern Uganda, marking a step toward expanding domestic output alongside its growing role in the regional gold trade. This is because the country’s gold reserves are pretty moderate.

Observers say some of the gold refined in the country is sourced from elsewhere, raising ethical questions and transparency concerns, as what may be labelled as Ugandan gold may actually not be originally from the country.

Although refining gold will generate income, mining consultants like Peter Ochieng warn that it may not create as many jobs as local mining or agriculture, if similar investments are channeled to these sectors.

While this is a cause for concern, another source of worry for many is the likelihood of over-dependence on gold alone. Experience across single-resource nations has shown that over-reliance on one resource to drive the economy is susceptible to volatility, especially when prices fluctuate.

Therefore, the balance is in diversification. So, while gold prices surge and more money comes in, sectors like agriculture and mining must be developed alongside investment in gold to avoid economic shocks.

Global Outlook/Conclusion

A critical factor behind the gold export surge is Uganda’s growing reliance on the Middle East, which accounted for 48.9% of total exports in January. The United Arab Emirates alone absorbed 99% of shipments to the region, underpinning a high degree of market concentration, particularly for gold.

Further statistics from the country’s Finance Ministry list other export destinations as Asia (18.4%), the East African Community (17.9%), and the European Union (10.5%), but none matched the scale of Middle Eastern demand.

The global economic uncertainty occasioned by the US-Israel war on Iran, and geopolitical permutations as a whole, while driving gold prices up, since gold thrives in uncertainty, may not augur well for the country because, as soon as these uncertainties stabilize, and investors move away from gold, foreign earnings will significantly drop, which will in turn hurt Uganda.

As a result of the above scenario, some farmers back home are worried that a return to stability in the Middle East, or changes in price, could reshape the demand for gold and negatively impact the economy of the East African nation if mechanisms are not put in place to address these issues.

With this knowledge in mind, coffee farmers are caught between letting go and investing more, as attention shifts, though temporarily, to gold, leaving them in a precarious situation.  

How long this (the gold boom) will last remains unclear, but what is clear is that Uganda’s gold story is a classic example of how geo-politics, regional instability, and global price changes can reshape the economy of a country and place it on a hitherto unexpected growth pedestal.

For the country’s policy makers, experts say this is the time to quickly fix key areas of the country’s economy, including coffee farming, especially those that have a direct bearing on the people, to ensure that more Ugandans, not just the elite, benefit from the surge in earnings from gold.