Museveni: Boost Exports and Tourism to Stabilize Shilling Amid Dollar Shortage

President Yoweri Museveni has identified a critical shortage of foreign currency as the primary driver behind the pressure on Uganda’s exchange rate. During an address marking the nation’s 64th Independence Anniversary, he emphasized that boosting dollar earnings from exports and tourism is paramount, rather than solely relying on government interventions to stabilize the Ugandan shilling.

Museveni explained that a stronger dollar benefits local exporters, such as coffee farmers, by increasing their Shilling revenue even if international prices remain constant. Conversely, a stronger dollar makes imports more expensive for businesses requiring more Shillings to purchase foreign currency.

The President attributed the reduced inflow of dollars partly to disruptions in the tourism sector, citing concerns like the Ebola outbreak that may have deterred visitors. He stressed the need for Uganda to enhance its capacity to generate foreign currency to meet the demands of businesses and importers.

Furthermore, Museveni questioned the utilization of the country’s foreign exchange reserves for financing non-essential imports. He suggested that items like imported perfumes and human hair products represent areas where consumers could exercise restraint, especially when foreign currency supplies are strained. He urged Ugandans to prioritize activities that generate foreign exchange, particularly exports and tourism, to ensure the nation can afford essential imports.

While acknowledging the current economic conditions and their impact, Museveni also highlighted Uganda’s relatively low inflation rate of approximately 4%. He underscored the importance of understanding the factors influencing the economy for businesses and households.

Source: https://nilepost.co.ug/news/376730/museveni-explains-dollar-shortage-warns-against-wasteful-imports