By Jessica A Badebye, Kampala – Uganda
The Ugandan shilling hit a record 3,000 mark against the dollar this week trading at 3, 031 UGX (Uganda Shillings) a dollar (buying) and 3,041 UGX a dollar (selling) by close of business on 11th Wednesday, 2015. The depreciation has pounced on the Ugandan economy like a panther causing immediate public panic.
Economic analysts say that if the shilling continues to depreciate at the rate it is doing, employers might have no option but be forced to cut down on jobs and there will be an increase in prices of goods and services so as to stay afloat. The business community in Uganda is already crying foul saying it is difficult to do business in such a situation. The executive director of the Private Sector Foundation, Gideon Badagawa warned that if the free-fall of the shilling is not arrested quickly, businesses will resort to drastic measures to hedge themselves from the effect as there are indications that it could get worse.
The executive director of Uganda Manufacture’s Association (UMA), Ssebaggala Kigozi said most manufacturers pay for raw materials in dollars which means that they are now paying more for less in production making business difficult because it will automatically increase the prices of goods hence erode the customer ability to buy. “It will not be long before fuel and power prices also go up. Generally, there is no winner here; we all get badly impacted,” he complained.
On a sad note, some landlords who charge rent in dollars are already making a kill at the inconvenience of the tenants who now have to part with more than they previously did. Some economists have blamed this on the war in South Sudan, the country being Uganda’s largest trading partner. According to the Ministry of Trade, the volume of exports to South Sudan dropped by 60 per cent with an export of about $358 million when war broke out in 2013. Although prices have not yet shoot up, it is expected that this will happen soon if the situation is not managed.