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Dar es Salaam. Reports that the Bank of Tanzania (BoT) had sold a portion of its national gold reserves sparked significant public interest and some measure of debate.
While initial reports on social media suggested these funds were being earmarked for direct government infrastructure projects, official clarifications from the central bank provide a more nuanced picture.
BoT’s director of Financial Markets, Mr Emmanuel Akaro told reporters on January 30 that the move was not an indicator of fiscal distress but rather a calculated exercise in strategic asset allocation and balance sheet management, aligned with global central banking best practices during periods of historic market volatility.
Dynamics of portfolio rebalancing
At the core of the BoT’s decision is the concept of rebalancing.
Central banks, much like institutional investors, maintain a diversified portfolio of foreign exchange reserves comprising various currencies such as the US dollar, the Euro, the Chinese yuan and physical commodities like gold.
The BoT’s internal policy frameworks, as approved by its Board, establish specific thresholds for these assets to mitigate risk.
Mr Akaro said that the BoT has cumulatively collected gold valued at $3.24 billion, surpassing its board-approved annual target of $2.0 billion.
This prompted the decision to sell excess gold estimated at $1.2 billion to bring reserve levels back in line with policy guidelines and board expectations.
“The main reason behind the decision to sell part of the gold reserves is to ensure that the central bank does not expose itself to risks it may not be able to mitigate. This is about liquidity management, not financing government projects,” said the BoT Director of Financial Markets, Mr Emmanuel Akaro.
As of January 29, 2026, BoT held foreign exchange reserves valued at approximately $6.52 billion.
Of this amount, gold accounted for about $1.2 billion, while holdings in US dollars stood at roughly $3.8 billion.
Reserves denominated in China’s yuan were valued at approximately 735 million US dollars.
A global phenomenon amid record highs
The timing of the BoT’s sale is inextricably linked to the extraordinary performance of gold on the global stage.
On Monday, January 26, 2026, spot gold hit a record $5,110.50 an ounce, driven by escalating international tensions and economic uncertainty.
This represents a staggering appreciation when compared to previous years, such as 2025, where the metal had already gained 64 percent.
Furthermore, market analysts from Societe Generale anticipating gold could reach $6,000/oz by year-end.
Analysts say by selling the excess gold, the BoT is effectively locking in profits at record highs and converting a non-yielding asset into more liquid foreign exchange holdings, such as US dollars, which can be reinvested in international financial markets to generate higher returns.
Wealth manager
Moreover, Tanzania is following global best practices where central banks act as tactical managers of their wealth.
Observers say that historically, central banks have transitioned between being net buyers and net sellers based on the “safe haven” utility of gold versus the need for liquidity.
In the late 1990s and early 2000s, many European central banks, including those of Switzerland, France, and the United Kingdom, significantly reduced their gold holdings under the Central Bank Gold Agreement (CBGA) when macroeconomic conditions were stable and gold prices were low.
Mr Akaro further clarified the independence of the institution and the destination of the funds.
“The central bank is independent. Any use of its investments to finance government projects must follow legal procedures and receive parliamentary approval. Proceeds from the gold sales will be invested in international financial markets to enhance investment returns, rather than to finance government development projects,” he noted.
In the current era, while many emerging markets have been net buyers to “de-dollarise” their reserves, the principle of tactical selling remains a standard tool.
For instance, the Central Bank of Uzbekistan and the National Bank of Kazakhstan have frequently adjusted their gold holdings, sometimes selling several tonnes in a single month, to manage liquidity and stabilize their national currencies.
The BoT’s move follows this tradition of active management, ensuring that the reserve portfolio remains a “living” entity that responds to global price signals.
Supporting the local mining ecosystem
A unique aspect of the BoT’s strategy, as highlighted by Prime Minister, Dr Mwigulu Nchemba in Parliament on January 30, is the cyclical relationship between the central bank and small-scale miners.
Since 2023, Tanzania has implemented a rigorous programme to purchase gold domestically, acquiring an average of nearly two tonnes per month.
This initiative dual purpose: it builds national reserves and provides a reliable, fair-priced market for local artisanal miners.
“The central bank has caused small-scale miners to benefit greatly by purchasing gold from them. When it happens that gold prices have risen on the world market, it is normal practice for the BoT to sell gold reserves in order to create space for new purchases of gold from small-scale miners,” he said.
Dr Nchemba also drew a direct parallel to how the government manages national grain reserves to ensure continuous support for producers:
“We do this also for grain. Every year the government sells grain from the reserve to create space to buy grain from farmers in the new season,” he added.
Institutional independence, transparency
Crucially, the Bank of Tanzania has stressed its independence in this process.
Mr Akaro, clarified that the proceeds from these sales are reinvested into the bank’s own investment portfolio rather than being funneled directly into the national budget for road construction or other strategic projects.
Under Tanzanian law, any use of central bank funds for government expenditure would require explicit parliamentary approval.
The gold surge of 2026
The surging gold prices have been caused by geopolitical “flare-ups” and shifting trade policies.
With significant tariffs being discussed by major economies and a renewed focus on hard assets, gold has reclaimed its title as the ultimate store of value.
However, for a central bank, “holding” is only half the strategy.
The other half is “optimising.” By rebalancing now, the BoT ensures it is not caught off-guard should the market eventually correct itself, while simultaneously remaining a primary supporter of the local miners who are the backbone of Tanzania’s gold industry.
