As domestic expenditure drops due to high inflation and borrowing rates increasing, consumer spending is very likely so suffer, and the Uganda economy will continue to remain in a bad state for years to come. This has also been caused by endless borrowing and spending from the bank, by Dictator Yoweri Museveni’s backward and irresponsible government.
The productive rate is also very low and the labour market keeps dropping. This cycle of negative growth does not paint a rosy picture of the Ugandan economy.
To put on a brave face, the Bank of Uganda (BOU) has reduced the Central Bank Rate (BOU) for the fourth consecutive time this year, from 14% to 13 percent as a stimulus to contribute to domestic economic growth. However this is not possible when food prices continue to rise. In the last three months, annual food crop inflation rose from -1.9% to 5.1%.. This has led to some Ugandans eating Baboon monkeys, and violent robberies.
The other factor that will continue to see the Uganda economy suffer, is the labour market. The private sector continues to be on snail pace when it comes to creating jobs. This is due to very high borrowing interest rates and access to it. The bad politics continues to favour the well politically connected instead of the hard-working Ugandans that can create jobs for the majority.
Manufacturing and Job Creation
The low quality end products by the Uganda manufacturers are not finding their way to foreign markets. Thus resulting into redundant inventories and stock piles. When a business can’t sell its products, it will definitely affect the labour force. When the people are not working, the economy will be the first casualty-the economy need purchasing power to breath.
The other hole in the Uganda economy is the domestic banking. Today one of the biggest domestic banks, the Crane Bank limited is suffering from customer trust. In spite of Damage control by Crane Bank Management PR machine with the help of Uganda tabloids, the damage is irreversible. Local depositors have started withdrawing their money from Crane Bank’s 46 branches.
Today 10,000 shillings (Uganda currency) is worth only $(US) 2.887.67 which is very likely to even drop further.
The Uganda economy will become the new frontier of Propaganda and financial ninja firms such as the Institute of Chartered Accountants, etc. will come up with headlines such as:
Uganda Ranked 6th in Access to Credit in Sub-Saharan Africa.
Of course this would be a great thing, but the reality in Yoweri Museveni’s autocracy is that, the private sector credit has been ring fenced, and turned into a back-hand for the most corrupt in Uganda.