BLEAK OUTLOOK FOR EAST AFRICAN ECONOMIES
Record inflation and sliding currency values are now combining with higher interest rates, posing further challenges to the economies of Uganda, Kenya and Tanzania in coming months.
Consumer confidence, from the little research available in the region, is nearing record lows and in particular rising food prices, partly as a result of the worst drought in half a century affecting the Horn of Africa and parts of the East African region, has made life for tens of millions of wananchi almost intolerably expensive. Power shortages affected manufacturing across the region and though tourism is generally flourishing negative headlines over the environmental impact of big development projects in Tanzania, tragedies in Kenya and political wrangles in Uganda have not exactly helped to promote the region as the most desirable tourism destination, when tourists from Europe, America and the Far East have plenty of choices where to go. There is now speculation how long the currencies of Kenya and Uganda will take to reach new low points and while central banks are periodically flooding the market with US Dollar sales to stabilize the local currencies, such action soon evaporates as it had never happened. In Kenya the Shilling tumbled to below the 95 level before another intervention but speculation is rife if the currency could hit the nightmare threshold of 100 versus 1 US Dollar while in Uganda the 3.000 Shilling range is looming in the distance too.
Inflation in Uganda is over 21 percent, in Kenya still, but only just under 20 percent and banks have now responded to the raising of key borrowing rates by their central banks to raise their own interest rates for loans by 2 and more percent.
Economists agree though that many of these developments are externally triggered, by the uprising in the Arab world, the ongoing conflict in Libya, poor economic performance in the US and the continuing crisis in the Euro Zone are all contributing factors, besides often the lack of spending discipline here at home in the region where in particular the ballooning cost of administration, through the creation of new districts in Uganda and new constitutional organs in Kenya for instance are draining the public coffers.
Oh how does one wish the good old days back when things, at least in retrospect, appeared so much easier aided by hindsight of course