Rejection Of Small Currency Notes Causes Inflation

Aug 14, 2002

The Federation of Uganda Chambers of Commerce and Industry (FUCCI) agrees entirely with Mrs. Lynda Chalker, a British Minister, when she recently visited Uganda and stressed the need to build local market in order to enrich the mass and thereafter the nat

Your PlatformBy Ephraim G.K. BuriituuzaThe Federation of Uganda Chambers of Commerce and Industry (FUCCI) agrees entirely with Mrs. Lynda Chalker, a British Minister, when she recently visited Uganda and stressed the need to build local market in order to enrich the mass and thereafter the nation. A rich population makes a rich nation and this is what the government should be focusing on, rather than collecting taxes from the already impoverished citizenry. Hon Gerald Ssendaula, the Minister of Finance, Planning and Economic Development, says sh7.8m Ugandans live below poverty line.The President and NRM government have been aiming mainly at the export market but gradually and surely destroying the homestead and local markets. To be able to export to the external market, so as to supplement government and the country’s wealth, we need not ignore or destroy the local and homestead market in production and monetary form. The grassroots peasant was starved of monetary purchasing power when the government and commercial banks withdrew the coins from sh1-20 from circulation. The President has been encouraging promotion of homestead incomes, but from a wrong pespective, he is advised to change course.The homestead and local producer, buyer and seller have no currency to sustain the homestead market. If the small denominations which are also legal tender are removed from circulation by Bank of Uganda, Ugandans read this as deliberate way of suffocating small markets. Instead of building that market, the BOU shares the blame for using the ignorance of our peasants and the ineptitude of the current Business Associations not to spot such an anomaly. Government should not be boasting of fighting inflation when lack of these small monies has been causing inflation in the course of impoverishing the peasants.Let us give an example of how the ordinary Ugandan has become the garden of the astute and the rich Ugandans. Current fuel prices are at sh1,530 for petrol, 1120 for paraffin and sh1,480 for diesel fuel. Without these small currency notes whoever buys single litres is cheated because there is no balance returned to him. You are forced to pay sh1,550 with loss of sh20, at sh1,120 you have to pay sh1,150 with a loss of sh30, while at sh1,480 you pay sh1,500 with a loss of sh20. This lost money is what buys soap and gifts offered to car owners. For a month, in monetary terms, this is colossal and is inflationary to the economy— charging the buyers for unavailable money.We know the government takes sh580 per litre of fuel tax. I would like to know to whom or on whose account does this (unreturned) retained money go?Unless the Bank of Uganda and Minister of Finance come out and explain why the denominations ranging between 1-20 were withdrawn from circulation or issue a statement about it, our conclusion would be that this money is collected for them, since it goes unchecked. Ugandans are only being taken for a ride while government falsely claims that the economy “was doing well.” It has not, and that is why we have poverty that the government will never alleviate, reduce nor eradicate within society.This is well demonstrated by what the British minister advised. If we are to have wealthy people and government, we have to release the small denominations (as other countries do) for small and medium scale, buyers and sellers and also producers for so that we can build viable and self-sustaining markets, base until we will be able to produce for the local market. We can store or export the excess.We must agree that we have been unable to sustain both markets, and/or the three of them. Ugandans in other parts of the country die of famine while in most parts there is plenty of food. This is quite unacceptable. Our Federation is all out to fight tooth and nail to eliminate this scandalous phenomenon. Producing only for the external market creates a gap at the grassroots.We demand, as of right, that the Bank of Uganda must from now release the small denominations in exchange for big ones and in order to provide sufficient, which had also become a problem in the market. We insist that this will assist the homestead saving for the peasant’s income, pricing and affordability to buy essentials at the grassroots market. We should not repeat the UPC slogan that “a rich man cannot be controlled/ruled.” The Federation believes that, unless the trend changes and our leaders and Mr. Tumusiime Mutebile accept such advice, the future of poverty alleviation, reduction and eradication is bleak, even with the PEAP, PAP or HIPC. Give our people their money. They know how to use it and become rich on their own rather than peddling the poverty caused by NRM, World Bank and IMF. It is then that prices will find their own levels and all producers, sellers and buyers at the grassroots shall be able to break-even.We stand to be challenged.The writer is Secretary General, FUCCI and theirChief SpokesmanEnds

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