UGANDANS WAKE UP TO MORE ECONOMIC BAD NEWS
The announcement yesterday about continuing power outages, following a payment dispute over unpaid subsidies by government to independent electricity generating companies, was followed by more bad news overnight. The Bank of Uganda, in order to bring inflation under control, has set the interbank lending rates to now 13 percent, triggering a raise in commercial lending cost across the economy. Meanwhile have fuel prices risen yet further, to new record levels for a litre of petrol of 3.700 Uganda Shillings and more while diesel prices are not pegged at or over 3.400 Uganda Shillings.
The business community is said to be deeply concerned over this triple whammy and city traders yesterday kept their shops closed as they were me by the recently appointed Minister for Trade and Industry Mrs. Amelia Kyambadde, who had to listen to a litany of issues brought to her attention of what government should do to reduce the cost of doing business in the country, in particular reducing license fees.
Current inflation still stands at 15.8 percent, although food prices have started to reduce on a wider scale following increased harvests after the seasonal rains started but across parts of Eastern Africa another drought has struck, leaving as many as 10 million people in the wider region in urgent need of emergency food supplies, in Somali, Ethiopia, Kenya, Tanzania and parts of Northern Uganda too.
While much of the current situation is attributed to the sudden surge in the cost of crude oil, following the uprisings in the Arab world since late last year, underlying factors too are said to be responsible such as the imbalances of imports and exports, a combination of which recently saw the values of East African currencies fall to record lows before combined Central Bank intervention in the region led to some level of recovery after selling, what has been described in excess of 300 million US Dollars in the region within a few days, to sting currency speculators and calm the markets.
Here in Uganda though the effects of higher fuel prices, higher interest rates and power outages will pose new challenges for the new government to address the crucially important issues of how the majority of people will make ends meet as salary packages have not kept pace with these developments.
Watch this space.
