Mine
Kampala, Uganda | URN | Mining companies should receive practical economic incentives to encourage transparency rather than face additional legal requirements, Kenneth Asiimwe, the Chief Executive Officer of the Uganda Association of Artisanal and Small-scale Miners (UGAASM), has argued.
Asiimwe says companies are unlikely to invest in audits, reporting and disclosure when these activities do not improve their access to financing, markets or investment opportunities.
Uganda joined the Extractive Industries Transparency Initiative (EITI) in August 2020, committing to greater disclosure of payments by mining, oil and gas companies and revenues received by government.
The initiative also seeks to establish what companies contribute to communities and the environment.
However, mining industry leader Kenneth Asiimwe has likened transparency to lipstick, arguing that disclosure alone adds no economic value to businesses unless it brings tangible benefits such as cheaper credit and better mineral prices.
“People here who want to borrow money even stand by their sideboards in their households. We even see them in their bedrooms as they are applying for small loans. They make you parade near your car, near your cooker. These microfinance. Near your wardrobe with your innermost clothes there. That is the theory: Issue me value, I return value,” Asiimwe stated, attracting murmurs and laughter from the audience at the venue and online.
His remarks challenge UGEITI’s push for legislation to make company compliance mandatory.
Asiimwe’s position comes at a time when the Uganda Extractive Industries Transparency Initiative (UGEITI) is pushing for a dedicated law to make participation in the global transparency initiative compulsory for mining companies and other entities in the extractive sector.
The 2023/2024 financial year, which identifies gaps in company reporting and verification, alongside questions about the extent of social and environmental expenditure reaching communities affected by mining and other extractive activities.
Speaking at a forum organised by the Advocates Coalition for Development and Environment (ACODE) and the Natural Resource Governance Institute (NRGI), under the theme, From Mineral Wealth to Community Development: The Roles of EITI in Promoting Extractive Sector Governance, Leveraging Community Development Agreements to Increase Mineral Benefits, Asiimwe said transparency must offer companies a tangible economic benefit.
“Transparency is one of them. As a company, there is no way I’m going to get a loan because I was very transparent last month,” he said.
He argued that businesses need more than recognition for disclosing information about their operations, particularly when compliance involves additional expenditure.
“These audits cost money. The reporting back and forth costs money. I could have used that money to buy five or six elements. Why should I use it to do another audit to send a report somewhere where there is no benefit?” he asked.
Asiimwe proposed that government could use institutions such as the Uganda Development Bank to provide preferential financing to companies that meet transparency requirements.
“If you people sat at the Ministry of Finance and you said any company that has been transparent is going to get money for mining at five per cent, you will be overwhelmed by reports of transparency,” he said.
He also urged government to study the International Tin Supply Chain Initiative (ITSCI), which operates a mineral traceability and due diligence system for tin, tantalum and tungsten supply chains.
Rather than relying primarily on legislation, he suggested that government could negotiate arrangements with smelters and refineries that make certification commercially valuable to mineral producers.
“Go negotiate for us prices in smelters and in refineries such that when you say I cannot present my minerals there without your certification or if I present there, I get a good price,” he said.
He argued that miners would have a stronger reason to comply with traceability and transparency requirements if certification improved their access to markets or earned them better prices.
Asiimwe has been a member of the argument presents a different approach from UGEITI’s efforts to strengthen its legal authority and compel companies to provide information needed to account for revenues and other contributions from the extractive sector.
The initiative’s annual progress report for July 2024 to June 2025 identifies the absence of a dedicated EITI law as a major weakness. It says implementation has continued to depend on Cabinet directives and administrative arrangements, limiting the Secretariat’s ability to compel timely and complete reporting.
UGEITI also says it lacks direct sanctions against companies and government agencies that fail to submit information or submit it late, leaving compliance largely dependent on goodwill and engagement.
The concerns are reflected in the latest EITI report covering July 2023 to June 2024. Of the 20 extractive entities included in the reporting exercise, seven companies failed to submit their reporting templates by the agreed deadline. Their revenues, according to the Uganda Revenue Authority, amounted to 31.9 billion shillings.
The report further indicates that 16 entities did not submit signed declaration forms within the required timeframe. These entities accounted for 645.2 billion shillings, representing approximately 98.5 per cent of revenues within the reconciliation scope.
The independent administrator consequently said it could not conclude that the revenues reported had been subjected to credible independent audits in accordance with international standards.
The findings provide a basis for UGEITI’s argument that voluntary cooperation is insufficient to guarantee complete and verifiable information.
However, Asiimwe dismissed the assumption that another law would necessarily improve compliance.
“The problem of Uganda is over-legislation. Boda bodas kill people, you register them. You create another law for boda bodas. Does it reduce the dying of people on the roads? Boats drown people, you register them. Does it stop the winds from blowing them over because they are substandard? Let us do practical things,” he said.
He maintained that government should examine why existing initiatives work or fail instead of assuming that legislation is the answer to every problem.
“The International Tin Supply Chain Initiative is not a law but it is working very effectively. Just study other tools which are working and understand why they are working and yours is failing. That is what we are asking,” he said.
Asiimwe challenged the expectation that mining companies should assume responsibility for providing public services and developing infrastructure in areas where they operate, arguing that government should use the revenues it collects from the sector to finance broader development.
“Everyone that is discussing here seems to think that once you put a mining company in a village, you replace the government there. Where is the government? No one is talking about the government,” he said.
He argued that mineral royalties should be channelled into productive sectors such as agriculture and water supply rather than relying on mining companies to finance projects that should ordinarily be government responsibilities.
“Take royalties to agriculture too. Take royalties to water supply. If it is about collecting more money,” he said.
Under the Mining and Minerals Act 2022, mineral royalties are shared between central government, local governments, sub-counties or town councils, and lawful or bona fide occupants of land subject to mineral rights. The respective shares are 70 per cent, 15 per cent, 10 per cent and five per cent.
The latest UGEITI report, however, shows why the distinction between government revenue and direct company contributions to communities matters.It records 198.66 million shillings in mandatory social expenditure declared by CNOOC Uganda Ltd, 62.24 million shillings by Sino Minerals Investments Company Ltd and one million shillings in discretionary social expenditure by Direct Reduced Iron Ltd.
The combined reported social expenditure was 261.9 million shillings. CNOOC also declared 300.16 million shillings in mandatory environmental expenditure. Five companies, including Tororo Cement and Wagagai Mining, provided information on social and environmental expenditure.
The report also records 592.49 million shillings in payments to regional authorities by CNOOC, Tororo Cement, Sino Minerals and Wagagai Mining.These disclosures are important because taxes and royalties paid to government are different from money companies are legally required to spend on communities or voluntarily commit to social development.
The limited social expenditure disclosures also raise questions about the completeness of information available to communities seeking to establish what mining companies are required to provide and what they actually spend.
The UGEITI reporting framework seeks to make such expenditure more transparent by identifying the nature of payments, their beneficiaries and whether they are mandatory or discretionary.
Asiimwe, however, cautioned against imposing extensive community development obligations without considering the financial realities of mining operations.
He said mining companies invest substantial amounts in exploration, equipment and operations before extracting and selling minerals, while fluctuations in commodity prices can undermine their ability to sustain long-term commitments.
“Mining takes a lot of money. How much money have you sunk in exploration before even taking out one gram? Now, someone comes before you even report to shareholders who invested money and they tell you, okay, now you must build a university,” he said.
He questioned the sustainability of projects that depend entirely on a mining company remaining operational, particularly where the company faces financial difficulties or falling mineral prices.“Communities are not supposed to have anything that is not based on business. Money is supposed to be recycled, not to just be pushed in communities to die,” he said.He argued that community development agreements should encourage sustainable economic activities rather than one-off financial transfers that communities may struggle to maintain.
He also cautioned against introducing regulations for community development agreements without first consulting the private sector on their financial and operational implications.
“The day you push for regulations of these community development agreements you are going to even abandon the idea. Because we’ve had these discussions. Quite frankly, there are no regulations for the CDAs. Extract them, have them drafted, then present them to the private sector. You realise that it is not a worthwhile venture,” he said.
Asiimwe also challenged government to reconsider its approach to artisanal and small-scale mining, arguing that the country risks losing potential mineral revenue by concentrating too heavily on attracting large-scale investors while neglecting local miners.
He cited the prolonged negotiations over the Rupa mining project in Karamoja, saying seven years had been spent negotiating the deal.
He argued that lengthy administrative processes and uncertainty discourage investment, delay revenue generation, and leave communities without opportunities to participate in mining.
“Governments that think and think deeply understand the concept of small-scale mining. Instead of having one deaf kid confusing you with money he is not going to raise for the next 100 years even if you give it to him, create small-scale industries in Kanungu, in Ntungamo and start working with small people,” he said.
He maintained that small-scale miners can contribute to mineral production, employment and government revenue if they receive technical assistance, skills and access to markets.
The 2023/2024 UGEITI report puts the value of mineral production at 464.7 billion shillings, an 87 per cent increase from the previous financial year.
Artisanal and small-scale miners accounted for 151.7 billion shillings, or 33 per cent of reported mineral production value.
Asiimwe argues that this contribution demonstrates why government should invest in improving the productivity of small-scale miners instead of treating them primarily as a regulatory problem.
“You need to understand the economics of money as a government. Guns don’t work. Negotiations and extension services are going to help you solve your confusion,” he said.
He also argued that informal mining activities can provide geological information that helps attract larger investors by demonstrating the presence of commercially viable mineral deposits.
He said investors often examine existing mining activity before committing money to exploration, making local miners an important part of the mineral development process.
He further warned that the country’s limited exploration activity and inadequate geological information undermine efforts to attract large-scale mining investment.
Asiimwe also lashed at the Minister of Energy and Mineral Development for the prolonged closure of the mining cadastre, the online platform used to administer mineral rights and licensing.
He said the uncertainty surrounding the system affects companies and individual miners who depend on it to apply for licences, file returns and confirm the status of their mineral rights.
Another industry representative who contributed to the discussion said the closure had left mining businesses uncertain about when normal transactions would resume.
Asiimwe, on the other hand, said the industry was not necessarily opposed to the Ministry of Energy and Mineral Development closing the platform to undertake reforms, but wanted consistent communication about the reasons for the closure, the work being undertaken and what users should expect when it reopens.
“Our lives depend on that Cadastre for us to stay legal. Now, everything that is done off-site, the Cadastre is now illegal. Any mineral transactions that are happening are not captured there,” said Asiimwe.
He added that businesses were continuing to meet financial obligations, including loan repayments, despite being unable to undertake some transactions because of the closure.
“Banks where you picked a loan to go and buy 20, 30 grams of gold, they don’t care that the Cadastre is closed. You must pay,” he said.
The concerns highlight the tension between government efforts to improve regulation of the mineral sector and the need to maintain predictable administrative systems for businesses.
Asiimwe suggested that improving transparency and ensuring that mineral wealth benefits communities will require the government to address these practical constraints alongside its efforts to strengthen reporting requirements.
He said miners should be equipped with the knowledge and skills to operate legally and productively rather than being excluded from the sector because they cannot meet requirements designed without sufficient consideration of their circumstances.
“Educate them, skill them on mining. The rocks are in their gardens,” he said.
He cited stone quarrying in Kabale as an example of how local communities, including women, have participated in mineral-related economic activities without necessarily having advanced academic qualifications.
He argues that formalisation should recognise the economic contribution and practical knowledge of local miners while helping them improve their safety, productivity and compliance.
Asiimwe notes that while his support for EITI, it should be be linked to tangible economic benefits.
He said the government should make it worthwhile for companies to disclose information while ensuring that mining communities benefit from productive economic activities and public investment.
Implementation of transparency and disclosure in Uganda raises the question of whether it can strengthen mandatory disclosure and accountability without creating regulatory arrangements that discourage investment and exclude the small-scale miners who already account for a significant share of mineral production.
