Currency reform of 1987 caused poverty
SIR — When it was announced that there was to be a currency reform in 1987, many people were optimistic in what they called the ‘Museveni dollar’. however, some good economists were opposed to the method of reform and they were right.
SIR — When it was announced that there was to be a currency reform in 1987, many people were optimistic in what they called the ‘Museveni dollar’. however, some good economists were opposed to the method of reform and they were right.
At the time of the exchange for example, one would need sh5,000 (old currency) to travel from Kampala to Kajjansi, on Entebbe Road, a distance of eight miles.
After the exchange, the two zeros were knocked off and the fare became sh50. But shortly after, the fare started to increase and today, one pays sh1,000 of the ‘Museveni dollar’ (an equivalent of sh142,857, old currency) to travel the same distance. That is an increase of 1,900% since the exchange took place!
There was the ugly part of the exercise. A number of fellow staff of Uganda Commercial Bank (UCB) died in motor accidents in the western region. There is one Mrs Mukasa who survived an accident where all the other staff died. I remember Mangeni with whom we briefly worked in UCB, Nkrumah Branch.
I could hardly recognise his body at Mulago! It is not clear whether the Government compensated the relatives of these people appropriately to enable their children remain in school. The staff members and other people died in vehicle collisions due to speed (normally associated with cash movement).
While all physical cash was subject to 30% tax, as well as the customer balances, I don’t remember a similar 30% cut on the loan balances! This means that those with loans suffered a greater burden paying back as their balances were not reduced by 30%.
Those with savings with the National Social Security Fund and other institutions who are alive today must be among those who curse the exercise because it made their savings useless. It is true, all who had monetary balances lost and it is the people who had assets who remained well off.
This currency exchange needs to be properly studied as it may have had a contribution to the rampant poverty being experienced in the country today. Real value was taken away from the people and people became much poorer.
I remember coins almost had no value at all. For
sh10 of the new currency, one could get very many coins. If one had at that time bought coins from whoever had them, he would eventually have enjoyed real value today.
The people of Uganda had much hope after the currency reform, but the truth is that this was ‘air’.
Many people were badly taxed and got out of business as their working capital was much eaten into.
As Uganda takes on the poverty alleviation strategies, there should be consideration of people who are in ‘injury’— real poverty as a result of the 1987 currency reform. They should be helped to make a new start.
William Kiwanuka
Kampala
At the time of the exchange for example, one would need sh5,000 (old currency) to travel from Kampala to Kajjansi, on Entebbe Road, a distance of eight miles.
After the exchange, the two zeros were knocked off and the fare became sh50. But shortly after, the fare started to increase and today, one pays sh1,000 of the ‘Museveni dollar’ (an equivalent of sh142,857, old currency) to travel the same distance. That is an increase of 1,900% since the exchange took place!
There was the ugly part of the exercise. A number of fellow staff of Uganda Commercial Bank (UCB) died in motor accidents in the western region. There is one Mrs Mukasa who survived an accident where all the other staff died. I remember Mangeni with whom we briefly worked in UCB, Nkrumah Branch.
I could hardly recognise his body at Mulago! It is not clear whether the Government compensated the relatives of these people appropriately to enable their children remain in school. The staff members and other people died in vehicle collisions due to speed (normally associated with cash movement).
While all physical cash was subject to 30% tax, as well as the customer balances, I don’t remember a similar 30% cut on the loan balances! This means that those with loans suffered a greater burden paying back as their balances were not reduced by 30%.
Those with savings with the National Social Security Fund and other institutions who are alive today must be among those who curse the exercise because it made their savings useless. It is true, all who had monetary balances lost and it is the people who had assets who remained well off.
This currency exchange needs to be properly studied as it may have had a contribution to the rampant poverty being experienced in the country today. Real value was taken away from the people and people became much poorer.
I remember coins almost had no value at all. For
sh10 of the new currency, one could get very many coins. If one had at that time bought coins from whoever had them, he would eventually have enjoyed real value today.
The people of Uganda had much hope after the currency reform, but the truth is that this was ‘air’.
Many people were badly taxed and got out of business as their working capital was much eaten into.
As Uganda takes on the poverty alleviation strategies, there should be consideration of people who are in ‘injury’— real poverty as a result of the 1987 currency reform. They should be helped to make a new start.
William Kiwanuka
Kampala