DOUBLE WHAMMY FOR UGANDAN ECONOMY
There was more bad news for the Ugandan business community when the Bank of Uganda, ostensibly in a measure to keep inflation under control, raised the ‘interbank lending rate’ by a full percentage point to 10.6 percent yesterday. Leading commercial banks responded by raising their ‘prime lending rate’ by various margins, some to as much as near 20 percent, making ‘regular’ lending jump back into the low and mid 20 percent margins.
This comes hot on the heels of inflation figures being released for March 2011, which were up to 11.1 percent, from a low 6+ percent figure still recorded in February.
The higher cost for bank lending will according to a regular source from a key business association office be passed on to the consumers, adding on one side more pressure to already heavily burdened ordinary people while at the same time depressing demand for more loans and credit from businesses.
Hotels, normally charging their clients in US Dollars, or the equivalent in Uganda Shillings according to the daily exchange rate, have not yet given any indication of raising their tariffs, probably considering the current low season and fragile occupancies, while a few safari operator did talk of raised charges for transportation in view of sharply risen fuel prices. Visitors to the country are advised to ascertain in advance if there are any changes to package prices they have been quoted a while ago to avoid unpleasant surprises.
Otherwise, with foreign currency values fetching near record exchange rates, visits to the country will remain affordable for tourists and the ‘Pearl of Africa’ remains open for business inspite of ongoing challenges.