FALLING CURRENCY VALUES BENEFIT TOURISTS BUT HIT LOCALS HARD
(Posted 07th July 2015)
When the Uganda Shilling crashed through the psychologically important 3.400 barrier of one US Dollar versus the Ugandan currency and at the same time the Kenyan Shilling for the first time since a major speculative down drive three years ago fell below the equally important 100 mark, were tourists counting their fortunes as their local expenses for drink, food, souvenirs, art and gifts suddenly became cheaper while in turn the locals are staring in disbelief at rising prices.
All imports from outside the region, which need to be paid in US Dollars, suddenly need a lot more local Shillings to pay for the bills. Fuel, food items, machinery, cars, spare parts and a lot more will at the next import cycle all reflect the lower value of local currencies and the result of the price increases will manifest itself in higher inflation and lower spending power, a lethal combination for the poor but also for the region’s middle class which still remains on a fragile foundation.
As safari quotations are largely based in US Dollars or Euros will the cost of prebooked packages not likely rise though the local expenses incurred by tourists will be less in their own currency, making them no doubt smile whereas the faces of the locals will become somewhat grimmer when reality strikes home.
Central Banks in the region are expected to offer a coordinated countermove to sell hard currency into the market but how much that is going to be, and for how long it lasts before the green buck injection is absorbed and the downward trend continues, is a question which answer is almost obvious.
Upcoming elections across much of the region and the regular jitters this causes abroad, the ongoing Burundi turmoil and lesser incomes from tourism have all combined for a near perfect storm and while coffee and tea farmers will no doubt celebrate higher incomes, they too will think again when they get their next bill for imported fertilizers.
Intending visitors to the region should monitor foreign exchange listings and, considering the latest increase in cost for a Visa to Uganda, ask straight away for a Common East African Tourist Visa, which now costs the same, i.e. 100 US Dollars but allows to visit Rwanda and Kenya too.
