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Economic crisis: when Uganda flies to Venezuela’s rescue

22.06.2019
Article from AFRIC Editorial
For almost four years now, Venezuela has been facing a severe economic and political crisis. In this Latin American country, the current situation is seriously affecting the proper functioning of the government. In order to overcome these difficulties that the country is encountering, Caracas sometimes uses support from Africa. Strongly, Uganda is one of the strategic allies on which Venezuelan power can count.

While the current recession in Venezuela is leading to shortages of medical care and especially unprecedented hyperinflation, nearly eight tons of gold have been shipped from Venezuela to a refinery in Uganda.

With a market value of more than $ 300 million, Venezuelan gold arrived in Uganda through two flights in early March. The information was confirmed as well by authorized voices in Venezuela and Uganda. According to the Ugandan authorities, the gold bars arrived at Entebbe International Airport on a Russian charter. According to the spokesman of the Ugandan National Police, there are some receipts that have been confirmed which are showing payments from the Venezuelan Central Bank. Apart from the inscriptions on the metal, the recordings of the aircraft flight plans also show that the flights departed from the city of Caracas, Venezuela. Venezuela has friendly ties with many African countries, so the arrival of these ingots in Uganda reveals the economic strength of African countries in the mining sector.

For Venezuela, it is certainly a strategic operation because the country has been hit hard by the decline in oil prices. In the recent past, oil was the source of financial security for Caracas. However, while sales of black gold accounted for about 96% of government revenue, this figure has dropped drastically. In such a context, the US has banned any US company from buying Venezuelan oil. The same embargo forbids any foreign entity from using the US banking systems to obtain Venezuelan oil.

On the basis of this observation, we can understand that Venezuela is actively seeking new economic opportunities. On the Ugandan side, it must be emphasized that this is also an economic improvement. In this island country of East Africa, gold production took off after the commissioning of the African Gold Refinery. Today, the site of the African Gold Refinery is located between Lake Victoria and Entebbe International Airport. Lake Victoria has beautiful beaches while the city of Entebbe offers an ideal setting for the yellow metal trade. Given its importance, the location of the African Gold Refinery for production is in a discreet and ultra-secure place. For many analysts, the presence of this type of infrastructure can help Uganda to achieve higher economic levels. For some time now, the factory has processed a large volume of gold from the conflict zones of the continent to Dubai.

Many reports reveal that Entebbe Airport is a hub for trafficking in that region. In 2003, for example, about 6 million tons of Congolese gold was exported through Uganda and then to on Switzerland. At the time, one of the companies that bought gold from Uganda was Metalor Technologies, an internationally renowned Swiss refinery.

The construction of the African Gold Refinery near Entebbe Airport required $15 million. According to some sources, the site would be able to refine a ton of gold per month. Despite this potential, Ugandans live in difficult conditions and have not been able to have good Education, jobs and infrastructure. It is paradoxical that the benefits from the gold industry do not yet benefit many in Uganda. Apart from this, the sector is also exposed to the risk of corruption.

Article from AFRIC Editorial

Credit image: google image/illustration

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