Uganda is to receive a $5 million credit in additional financing from the World Bank to strengthen its mineral resource management in the wake of steady progress in the mineral sector over the past five years.

The financial assistance is to be channelled under the Sustainable Management of Mineral Resources Project set up five years ago to improve Uganda’s capacity to exploit its mineral resources effectively.

With the additional resources, Uganda is expected to develop a sound minerals sector based on private investments and ensure improvements in selected artisanal and small-scale mining areas.

The assistance is provided through the International Development Association (IDA) — a development financing arm of the World Bank Group.

The World Bank believes that the credit line will help improve Uganda’s international competitiveness in the mineral sector.

“These extra IDA resources come at a critical time for Uganda, when the world is experiencing a minerals boom, which has seen a rapid increase in prices for metals.

Uganda will utilise these funds to position itself to take advantage of the increasing exploration investments,” said Christopher Sheldon, World Bank task team leader for the mineral resources project.

The additional support for Uganda’s Sustainable Management of Mineral Resources Project comes on the back of strong growth in its mineral sector, both in terms of players and revenue earned.

According to the Bank, mining revenues grew by 202 per cent from $550,000 in 2003 to $1.66 million in 2007.

Last year, Uganda issued a total of 229 mineral exploration and development licences, yielding $22 million, compared with 190 licences issued in 2003 that generated only $5 million. That constitutes a 21 per cent growth in issued licences.

On the other hand, the number of licences issued to artisanal and small-scale miners rose from 100 in 2003 to 221 in 2007, representing a 121 per cent increase.

Though the country’s leading mineral export is gold, active mining operations also involve copper, tin and wolfram.

According to the background paper on the budget for financial year 2008/09, the government is keen on the growth of private investment in the mineral sector alongside mitigating the negative impact of mineral wealth booms.

The challenge posed by the discovery of oil and other minerals is for government to manage the economy in a manner that takes advantage of the opportunity, while at the same time guarding against the possible destructive influences associated with increased revenues from a single or limited range of products,” reads the paper.

The Sustainable Management of Mineral Resources Project was initially funded by an IDA credit of $25 million, with co-financing worth $5.35 million from the African Development Bank and $6 million more from the Nordic Development Fund.

Though scheduled to close on June 30, 2009, the additional financing is expected to extend the project’s lifespan to June 30, 2011.

The project is also focused on reducing environmental degradation caused by the mineral sector and improvement of the quality of life.

“This project will enable the development of the country’s mineral resources in an efficient, socially sustainable, and environmentally sound manner, as well as contribute substantially to the country’s earnings, employment, reduction of poverty, and improvement of quality of life in rural areas,” said Kundhavi Kadiresan, World Bank country manager for Uganda.