Traders feeling pinch of paying bills in dollars
Mr Everest Kayondo, the chairman of Kampala City Traders’ Association, addresses journalists. PHOTO BY FAISWAL KASIRYE
KAMPALA- The Kampala City Traders Association (Kacita), has decried the trend of service providers charging them in US dollars, a scenario that is further depreciating the shilling.
Kacita chairman Everest Kayondo, has said the continued tendency of service providers charging them in dollars has made the Shilling lose value.
Mr Kayondo says service providers, some of whom are landlords, now demand to be paid in dollars, putting unnecessary pressure on the dollar, which has further weakened the local currency.
Since the closure of last year, the Ugandan Shilling has been in a free fall against the major currencies, especially the dollar, which is a major trading currency.
The reading of the budget did not do much to inspire a slight appreciation of the Shilling but instead opened up more taps, further dragging the Shilling to record an all-time low level of Shs3,350 against the dollar.
“...Today, it [the Shilling] is already trading at Shs3,500 for a dollar. This to us is very worrying and the trends seem to be continuing in the negative direction,” he said.
However, Mr Moses Lutaalo, the head commercial and residential property at Knight Frank Uganda, says landlords are charging in dollars because they borrow money in the foreign currency to finance the construction of their buildings. He explains that they have to charge in dollars to make their loan payments.
But Mr Lutaalo says charging rent in dollars only becomes a problem when the shilling depreciates like what is happening now and tenants who earn in Uganda shillings have to pay rent in dollars.
“Some businesses which did not hedge against currency depreciation will certainly find it difficult to meet their rent obligations,” he explains.
The traders through their umbrella body Kacita, have also listed other factors such as the importation of goods that have led to the weakening of the balance of payment position of Uganda.
The traders have also asked the government to put pressure on their unclaimed debts from Kenya, amounting to $45m, which is supposed to be compensation of those who lost their merchandise during the 2007 post-election chaos.
The traders also demand compensation of $47m from South Sudan, which they lost during the 2013 uprising. This, they say, is enough money to stabilise the economy for a few days.
