Will a reduction in the CBR jumpstart Uganda’s economy?

In today’s article, I put into perspective the recent move by the Central Bank of Uganda of reducing the CBR in order to jumpstart the economy. Enjoy the read…

In the past months, Uganda’s economy has experienced a massive slowdown in its growth. A number of events have played a significant role in this economic downturn, for instance, an increased unemployment rate relative to population growth, a prolonged drought at the beginning of the year, and a reduction in money supply within the Ugandan market. Many businesses are downsizing while some are even closing because of the inaccessibility to credit. In other words, the interest rates have been very high and therefore not favourable for the local entrepreneurs who also have limited collateral security. The populous has also reduced its demand for goods and services due to a shortage in their disposable income. Meaning that majority of the population can no longer afford to spend as much as before, but are rather focusing on making their ends meet.

In a bid to revive the economy, Bank of Uganda (BoU) has reduced the Central Bank Rate (CBR), that is, the rate at which the commercial banks borrow money from BoU. The reduction from 12 percent to 10 percent is essentially meant to reduce lending rates, encourage the private sector to borrow money from commercial banks, increase local investment, and in turn increase the amount of money circulating within the economy.

However, oftentimes bankers have stated that the CBR is just a signal rate and doesn’t automatically translate into the lowering of lending rates to its level. In addition to that, most of the players in the private sector are sceptical to establish new and expand already existing investments. The high costs of production are pushing them to downsize their businesses with the hope of at least breaking even. Another reason why many local investors are not rushing to borrow is that the commercial banks might actually not follow suit to reduce their lending rates.

While addressing a press conference the other day, the Kampala City Trader’s Association chairperson, Evaristo Kayondo, had this to say; “Bank of Uganda has been reducing its rate for a year now but interest rates remain high. Businesses cannot be borrowing at a rate of 20 percent and expect to survive! For the last one year, bank’s have taken over business property because of these high rates. We don’t expect a lot to change.”

In my humble opinion, I think that fiscal and monetary policy measures like reducing the Central Bank Rate can only do much in the short-term. Therefore, to achieve a sustainable and long-term jumpstart in Uganda’s economy, the populous needs to save, organise and pool together the available financial resources in their respective sectors. This should be done with an intention to specifically support local investments. Eventually, the economy will be able to support itself to a good extent using resources from within.

Thanks for reading, until next time…

The Homerun: If you’re willing, then it’s possible.

The homerun obstacle race was scheduled for late last month and I was so looking forward to it. Unfortunately, a few days prior to the race I got sick and started second guessing my participation. This run was meant to demonstrate the challenges that refugees face while fleeing their home countries, usually in small families. Some of the challenges included delays in documentation, language barrier, tiresome routes, hostile and unfamiliar cultures. Manoeuvring through barbed wire fences, climbing over walls, crawling through muddy fields were also simulated.

The day before the race, just after deciding not to participate, I got a pep-talk from a close friend who successfully convinced me to change my mind. However, there was one problem, I didn’t have a family to run with. “Hey James, am looking for a team, can I join yours?” a colleague asked me. “Hey, I don’t have one, but we could create our own.” I responded. “Cool, let’s do that.” he added. A minute or two later, four ladies walk up to us and say; “Hey guys, is it alright if you adopt us into your family?” “Yes, of course!” we were quick to respond. We then formed an adopted family named it Samuka and hit the road.

During the race, there were times when I felt like sprinting but some family members were exhausted. So, we all had to reduce our pace and run as a family. At some point, it became more of a home walk given that we resorted to walk a good portion of the distance. Then came the obstacles! Hardly could we hold our breaths, when we encountered the next obstacle. Our mental strength was challenged, our bodies were pushed to the limit, we got agitated, but we’re willing to go all the way. When we couldn’t sprint, we jogged, when we couldn’t jog, we walked, when we couldn’t walk, well, we rested a bit, the ladies took a couple of selfies then we marched on.

Just when we thought the obstacles were done, there was the mud-crawl looking right in our faces. The whole family was quite skeptical about doing the mud-crawl given that some of us didn’t have a change of clothes, and the thought of walking through town all muddy was simply unbearable. Luckily, one of us had a change of heart and decided to take one for the family. Inspite of the occasional hiccups along the way, we managed to reach the finish line because we were willing.

Obstacles and hurdles that are often times impossible to anticipate disorganize our plans and divert us from our goals. Nevertheless, we should be flexible enough to adjust our plans whenever necessary, be willing to extend a helping hand and take one for the team. Above all, we need to develop a character of resilience, an attitude of never giving up.

It’s not how many obstacles we may hit and fall that matter, but how many times we are willing to get back up when we do.

If you’re willing, then it’s possible!

Until next time…

Development starts from within us.

I usually take walks along the streets of Kampala everyday after work. Last Friday proved to be one of a kind, mostly because I was accompanied by an enchanting and brilliant young lady. Momentarily, a conversation ensued between us in which I got fully immersed. Just across the street, there sat an able bodied man who was clad in rugged clothes with arms stretched out begging the passers-by. “Mpaako kikumi!!” (Give me one hundred shillings!!)” He repeatedly begged. “Ariz, do you think that guy over there has aspirations for the future?” I asked Ariz signalling towards his direction. “Uhmm, I highly doubt that, at least based on what I see.” Ariz responded. “Honestly speaking, I think having aspirations for his future, let alone pursuing them is the last thing on his mind. All he cares about right now is his next meal and possibly where he’s going to spend the night.” She added.

When I saw this guy begging, it got me thinking of the many young men and women in Uganda and across Africa who relate with him in one way or another. Some even have the privilege of University education but are still indifferent from the street man. They are sitted on their potential gifts and talents at home doing nothing productive. Apparently, most youths believe that personal development is a waste of time and energy. This is largely because of the mindset they have adopted from their societies. They don’t value their self worth and also don’t have mentors to emulate in that regard. Therefore, the whole idea of building human capital is an aspect so alien to pursue.

Personal development covers activities that improve awareness and identity, develop skills and talents, facilitate employability, enhance quality of life and contribute to the realisation of dreams and aspirations. These activities are more often than not disguised in service, that is, opting to be selfless inspite of the qualifications and certificates that we hold. I believe that we ought to look beyond ourselves, because the abilities that we possess aren’t for us to just keep in our minute and pocket-sized worlds, but rather to give of ourselves and create a positive difference in our localities and in the lives of those we are privileged enough to encounter.

When we begin to serve with a passion regardless of the field we are in, the need for personal development becomes inevitable. That way, we become vessels of change and a means to development rather than an end in itself. Better yet, pursuing something bigger than self opens doors for a great yearning coupled by an unquenchable thirst for knowledge and wisdom. Eventually, development becomes an adventure worth taking on.

An orator once said; “To every individual, there comes that one opportune moment when you are figuratively tapped on the shoulder and given a task specifically tailored to your gifts and talents. What a shame when that moment finds you unprepared or unqualified!”

In which category do you belong?

Until next time…