Is the sh50 coin becoming irrelevant?
May 04, 2015
Charles Sengendo, a bodaboda rider at Nakawa in Kampala ordered for food from a local vendor at Nakawa market and consumed it. He turned to pay for the meal and pulled out the money that included some sh50 coins worth sh300.
By Samuel Sanya and Benon Ojiambo
Charles Sengendo, a bodaboda rider at Nakawa in Kampala ordered for food from a local vendor at Nakawa market and consumed it. He turned to pay for the meal and pulled out the money that included some sh50 coins worth sh300.
What surprised him was when the vendor refused to accept the sh50 coins without any reason. He says the vendor forced him to give her any other money. This left him wondering whether the sh50 is no longer legal tender in Uganda.
Another boda-boda rider at Nakawa Bosco Mbonabukya, says he is stuck with sh50 coins worth sh4000 at home and has nowhere to take them. He says he gets them from clients after rendering "our transport services to them."
"We boda-boda riders are forced to accept the coins because we always have nothing to say about it," Mbonabukya says.
The sh50 coin is also being shunned at Universities. Steven Mutebi, a student of Kyambogo University cannot even remember when he last used the coin to make transactions because the coin has totally lost value and cannot purchase anything in Uganda.
Evelyne Karungi, a mobile money operator at Nakawa says she accepts the coin in making transactions because it is legal tender but when she gives the coin to her clients, they rarely accept it 'because it is too small and can easily get lost'.
Recall the coins – Economists say
The sh50 denomination was started in 1971 at the start of the late President Idi Amin regime. During the years 1971 – 1975, one dollar was pegged to sh7.14.
Uganda's currency has 13 denominations, eight of which are coins according to Bank of Uganda data. The coins include the sh1, sh2, sh5, sh10, sh50, sh100, sh200 and sh500.
"Low denomination coins are important in retail transactions because they enable retailers to calculate prices in a more exact manner. The buyer is able to pay the precise amount quoted by the retailer," an excerpt from the Bank of Uganda website says.
As of 28th April 2015, the shilling had depreciated by 99.8% over 44 years, although, in 1987, the shilling was devalued by a massive 66% to stabilize the economy.
Lawrence Bategeka, an economist says the current trend of shunning the sh50 coin shows that the public is challenging its use as legal tender. He says it does not make sense to carry many bulky sh50 coins to buy a loaf of bread as it is inconvenient.
"If the price structure has changed such that the sh50 coin has been rendered useless, and one has to combine two coins to buy the smallest thing then the Central Bank should recall the sh50 coin and abolish it altogether," Bategeka says.
"The coin must be relevant and it should be convenient to carry. But then, what was the last time you bought something worth sh50?" he ponders.
Bategeka says having sh50 coins in circulation could be creating an erroneous picture of money in circulation. "Coins make up a small percentage of money in circulation so I do not think shunning the coin will immediately lead to inflation," he says.
Unlike Bategeka's suggestion to recall and abolish the sh50 coins, Quraish Muwonge, a trader says government should either increase the size of the coin or make a sh50 note if the denomination is to stay.
On the other hand, Evelyne Karungi, a mobile money operator in Nakawa says the government should do away with the coin because it totally lost value.
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