Make Hard Decisions, Tough times ahead – BoU Cautions Ugandans

Bank of Uganda

PEPPER BUSINESS – For many Ugandans, every coin now counts. Hard decisions are being taken as the spectacle of meeting the proverbial three meals a day becomes an extreme sport, with many people struggling to find money to buy the basic necessities of life such as food.

According to the Uganda Bureau of Statistics (UBOS), the overall change in the prices of goods and services, otherwise known as inflation, moved up to 7.9 per cent for the 12 months to July 2022 from 6.8 per cent over the same period a month earlier. Annual food prices shot to 16.4 per cent in July 2022, up from 14.5 per cent in June 2022.

And according to Bank of Uganda’s forecasts, the prices are expected to remain high for the rest of the year. That is the kind of information that John Kiyingi, a motorist at Galiraya Arcade, does not want to hear, considering he is already grappling with the current high fuel prices.

“Life is hard,” he said with strong emphasis. He added: “Fuel money is interfering with my savings and earnings as well. We used to buy a litre of petrol at Shs 3,000 [three years ago], and that would take you some distance. But now, I can barely make one trip with that amount of money. I am suffering.”

To put his suffering into context, Kiyingi said he has since moved his children from the more expensive private school to the cheap government-funded setting. That he has two families to take care points to his dire situation.

Many of the risks that Uganda’s economy faces today are imported. As the Russians and Ukrainians sledge it out for territorial dominance, with their war now dragging through the sixth month, global food and fuel prices have shot up partly because a lot of grain and oil comes from that region.

Other global economies have also sucked out money from their economies through the issuance of monetary instruments such as treasury bonds – a common measure used to control inflation. This has reduced the amount of money coming to economies such as Uganda.

“Quarterly GDP estimates by the Uganda Bureau of Statistic indicate that the economy contracted by 1.6 per cent quarter on quarter in March 2022. All sectors of the economy contracted with the services sector taking the biggest hit,” Bank of Uganda announced last week.

Bank of Uganda further explained that “overall, economic growth prospects have been dimmed further with increasing risks of a global recession, and weaker consumer and business sentiments as high inflation and commodity prices, continue to erode households and business incomes and financial condition tighten.”

Stella Nantume, a market vendor in Nakasero market, said, “things are no longer the same because my sales have reduced totally. I used to make sales of Shs 300,000 to 500,000 daily. Now the best I can make is Shs 100,000. The customers are few. It is scary at the moment, especially because things like tomatoes are perishable.”

Sarah Nazziwa, a businesswoman in Owino market, complained that “things are tough. I even admire people that went abroad to work because even us that own a business are not doing well.”

She explained that “things are expensive. It is very hard for someone to come and purchase clothes from me when they do not have what to eat.”

Nazziwa now attributes the little money she makes from her business to luck. She says she is struggling to take care of her family. And now, she is resigned to the more humiliating option: “If things continue like this, I am likely to go abroad and work as a housemaid or go to the village and resort to farming because I am left with no option but to do that.”

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