The Bank of Uganda (BoU) on August 12, 2022, increased the Central Bank Rate (CBR) to 9.0 percent, scaring Ugandans and businesses that now see hope of no borrowing from commercial banks in the near future.
This is because commercial banks, following the increasing of the CBR in the recent months by BoU, have also increased commercial lending rates, sending away Ugandans from borrowing to develop themselves.
BoU claims that the increase in CBR is aimed at controlling the annual headline inflation now estimated to be at 7.9 percent in July.
The increase of CBR is aimed to reduce supply of money in the economy so that inflation is kept at bay. But how long will this measure take?
We know that the Finance Ministry which works alongside BoU has also not released money fearing that it will worsen the situations. Government workers have been crying of delayed salaries, yet they have to cater for their families.
Meanwhile, President Museveni said Ugandans should be creative and engage in production to fight the inflation caused by external factors. Where will Ugandans get the money if banks have increased interest rates?
Can Mr. Michael Atingi, the BoU Deputy Governor answer the above question given that even the money for the Parish Development Model (PDM) continues to be held by the government?
BoU is telling Ugandans of expected depreciation of Uganda shilling yet on its website, figures show the shilling has appreciated, though slightly. Is BoU scared of the Ugandan shilling appreciating?
Ugandans at this point need an institution that gives them hope, than telling them how the situation is expected to worsen. Ugandans are suffering, with most families unable to afford their needs.
Some schools closed earlier because they could not afford to get loans that would have kept children in school. Parents at home especially those in urban centres are facing the wrath. Is BoU crying with them?
This is worsened by the fact that many farmers have no money to buy seeds for planting as the rains for next season set in. That is why the Members of Parliament asked central government to release Shs 4 trillion for seeds so that farmers can plant.
Remember farmers get some money when the banks are offering cheap interest rates and government is paying its workers on time. So BoU should not be bragging that that the limited supply of money is doing wonders. The rural farmers are crying and the country will be in problems in the remaining months of the year, if government and BoU do not increase the supply of money in the economy.
We know that BoU still is anti-subsidy from government. Ugandans have suffered of high fuel prices because of this. Yet some of our neighbours have had their governments intervene in the fuel prices because they know how bad the high prices are to the poor population.
What can only conclude that the policies BoU is implementing in the guise of controlling inflation are targeted at demoralizing the poor Ugandans at the expense of a few that are rich. Please BoU must stop threatening Ugandans with warning of further increase of the CBR and other bad measures of tightening the economy. This is because some people don’t have money to feed their families and care for the sick in the hospitals.
Why has BoU failed to tell Ugandans that Ukraine has started re-exporting wheat even to Africa, fuel prices for crude oil are coming down on the international market as well? This is the hope that Ugandans need, not warning after warning.