BUSINESS: FALLING SHILLING VALUE HITS BUSINESSES HARD IN ARUA

Traders and transport operators at Arua new taxi park – Photo by Morish Dramadri

By Morish Dramadri

Arua city

The depreciating value of the Ugandan shilling on the global market is hitting businesses hard in Arua City, with traders calling for urgent action at border points to regulate the outflow and use of Uganda’s currency across borders.

Currently, the Ugandan shilling’s exchange rate stands at around UGX 3,740 to UGX 3,755 per US dollar, reflecting the challenges facing the country’s foreign and domestic trade. The decline has also prompted some residents to question the continued practical value of certain denominations of the country’s legal tender.

Aziz Chochoro, a boda boda rider in Arua City, narrates his experience transacting with Uganda’s 50-shilling coin, highlighting what he describes as the declining value of the country’s currency.

“One day I went to a cobbler to repair my shoes. At the point of payment, I had 400 shillings, but the man wanted 500 shillings. When I added some 50-shilling coins, he refused, saying the 50 shillings coin is now useless and cannot be used. I think government should stop making the 50-shilling coins because when you transact with it, they say it has no value,” Aziz testified.

In July this year, Uganda’s central bank, the Bank of Uganda, reported that the country’s shilling had depreciated by 3.2% against the US dollar year-on-year, while weakening by 1.3% quarter-on-quarter. The bank attributed the decline to bearish market sentiment following renewed hostilities in the US-Iran conflict.

Wadri Patrick Ajiani, a businessman in Arua City, however, blames the depreciating value of the Ugandan shilling on the uncontrolled flow and use of the country’s currency, particularly at border points. He is calling for measures to regulate the movement of Ugandan currency across borders.

“The value of Ugandan shilling has dropped greatly. Out of 100,000, if you only pull 1,000 shillings, the money is almost finished. What you buy is small, but you spend a lot of money. Our shillings are being used even up to Congo, but we don’t use Congolese francs here. Let the government control the flow of Ugandan shilling to Congo,” Ajiani decried.

Meanwhile, Moses Oringi, an economist and finance policy analyst, attributes the depreciation of the Ugandan currency to the country’s high levels of imports compared to exports. He is urging citizens to recognize and continue using the country’s legal tender.

“We are so much into importation rather than exportation. The rejected 50-shilling coin may be portraying that the coin has very little practical purchasing value, but it is legally valid,” Moses affirmed.

Written by newsroom-radiopacis