According a Bank of Uganda (BOU) source, the value of Uganda Shilling against the US Dollar is expected to continue a steady slide downward for a while. A banking officer in the Operations Division of BOU told this reporter on condition of anonymity that there are three major reasons for the misfortunes of the Shilling.

The bank officer said: “First is the global financial crisis which, unfortunately, both the BOU governor and ministry of finance (MOF) chose to joke about early this year. However, it has caused the funds remitted by Ugandans abroad, especially Baganda, doing kyeeyo to fall drastically as work becomes harder to get.  Similarly, local NGO’s and church pastors are experiencing a tough time fundraising in the USA and Europe. Many of them are collapsing or firing employees as the dollars dry up.

“The second major reason is that our exports are not seriously growing in dollar terms. Even the  recent increase in exports to Southern Sudan seem appears to have been a bubble because the Sudanese central government is now limiting the supply of dollars to the South due to political tensions.  The dollar shortage in Sudan has in turn reduced the dollars which corrupt Southern officials have been bringing into Uganda to bank or buy mansions and Buganda land.”

The third reason that the banking officer gave is Uganda official corruption and greed. He pointed out that: “Mr. Museveni’s  state house has squandered tens of millions of dollars on deals like the presidential jet, grants to fake investors like Basajjabalaba and numerous so called ‘classified’ withdraws.  When other government officials see how Mr. Museveni’s state house is stealing, they can only emulate. Over time, this unending corruption has scared the more serious investors from the local stock exchange and our government securities. In fact the weak securities markets are only surviving on laundered money which the owners are still afraid to send out of Uganda.”

The BOU employee warned that the value of the Shilling was likely to continue falling for sometime. He explained: “I think that the donors are likely to cut aid to Uganda before they  increase it, because the political situation is likely to get much worse as the 2011 elections approach.  Both the domestic and external debts are likely to get worse because Mr. Museveni is creating more districts even as we speak. He is also preparing to grow army, police and other imports before the elections.  And our FOREX reserves are not enough to allow Mutebire to support the Shilling by selling dollars.  Maybe for a few weeks.”

Below are the US Dollar exchange rates for since January (on the 20th of each month):