22 January 2013

Uganda: Dollar Scarcity Hurts Goods

Kampala — After the boom years of 2010, 2011 and 2012 the South Sudan Business is becoming sour to Ugandan businessmen who export their goods to the country.

The business is now facing the unprecedented slump blamed on the global financial meltdown.

According to International Monetary Fund (IMF) Uganda's real economic growth was projected at 6.0 percent in 2010, higher than that of many other comparable countries.

The projection was premised on Uganda's sustained macroeconomic policies, a flexible Labour market and access to international markets inspite of the slow world recovery from the global financial meltdown.

Uganda's economic growth according to IMF world economic outlook 2009 was expected to recover to a longer -term average of 7.0% by 2012.

However, the IMF Uganda's representative Tom Richardson says that any instability in Congo or South Sudan could hurt the Ugandan Economy.

The Ugandan economy, however ably adjusted to the external shocks through the balance of payments and the flexibility exchange rate that partly absorbed the shock.

Monetary policy management by Bank of Uganda (BOU) has recently been further complicated by the weakening of aggregate demand in the economy as exemplified by lower net exports, slowed growth in private sector credit and lower demand for currency.

" Before this global financial meltdown struck , I used to transport produce to South Sudan and I would sell all and come back to collect more , but today I only take one route and come back with some not sold", says Jackson Mukasa a trader of produce from Owino market in Kampala .

Many of the new Ugandan entrants to this kind of business who targeted South Sudan have greatly been disappointed by the dollar scarcity.

"Most business men have resorted to keep their goods in stores waiting for the dollar to go up before they can sell off their goods to South Sudan," stressed Mukasa.

The Central Bank has announced that Uganda's exports to South Sudan have reduced by 20% as the American dollar continues to suffocate the other country's currency.

The commercial banks were also requested to lower their lending rates by the central bank rate at 12%. However many of them have defied this order and some of them are charging 26%, a rate which is quite expensive for the common man.

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