Monday, October 20, 2003
JOACHIM BUWEMBO
At Last, a Banknote So Big You Can Wear It!
Ush50,000 today is the equivalent of $25. At the time of the currency reform 15 years ago, it would have been $833. The largest note then was of Ush100, worth just under $2. The dollar had just been fixed at Ush60 after massive devaluation of the shilling. Due to inflation, the local currency has since fallen more than 3,000 per cent to its present Ush2,000 to a dollar.
But inflation is not the only economic indicator and a lot of development has taken place since that time; there has been massive growth in construction, export agriculture, medical and educational services, manufacturing and commercial services.
The shilling�s depreciation over the years is therefore on its own not a conclusive measure of the state of the economy. No wonder, debate on the national currency is of the light type and many of the views advanced on our FM radio stations (where else?) border on the hilarious.
Someone phoned a radio station and warned that the new note was going to disrupt activities in the city�s markets as more time would now be spent on looking for change than on trading. The caller argued that to go to a market and buy a kilo of tomatoes using the 50,000 would send the traders into a change-hunting frenzy, since a kilo of tomatoes costs only Ush1,000.
The other "problem" people are citing is that of "dropping" or misplacing a note. They say it is not so catastrophic if you misplace a Ush1,000 note. But Ush50,000? Can you settle and concentrate on your work before finding it? And if you don�t find it?
One caller said it would be humiliating to be paid one�s salary in just one note. Many workers earn just about that amount in a month. "Imagine being paid just one note for a month�s work!" the man said in depressed tone. Obviously, he has never been paid by cheque.
One woman worried about the handouts she has to make to relatives and friends. She said it was easy to peel off a Ush1,000 from her purse for "bus fare" for a job-hunting relative who came sweating to see her at her office on a hot afternoon. But when the only note you have is of Ush50,000 and you have to look for change, the other person will think you are really mean if you only give them Ush1,000 and retain Ush49,000. Our relatives are going to start hating us, she warned.
Inflation can also cause havoc with currency denominations in the opposite direction. Small denominations can become tricky in an inflationary situation. The Bank of Uganda issued coins for one, two, five, and 10 shillings. But the inconvenience of counting thousands of them for a simple transaction has rendered them almost unusable.
Almost, I said. The largest supermarket, Shoprite, from South Africa, gives change of those small denominations after purchases of items whose prices are not in round figures. In any other shop or office, you forfeit the money if the balance due to you is not a round figure.
And sorry, you cannot settle your bills in small denominations in 99.99 per cent of transactions.
The media reported a scuffle that ensued in a matatus (commuter taxi) the other day when a passenger tried to pay Ush200 using a Ush100 coin plus 10 coins of Ush10 each. The matter had to be resolved at the police station. The police told the disbelieving conductor that he was actually breaking the law by refusing legal tender.
Rejecting Ush10 is considered quite normal these days. Yet before the currency reform, it was equal to several dollars. Did someone say time is money? In our case, time makes money into no money.
Joachim Buwembo is Editor of the Sunday Vision of Kampala.
E-mail: [EMAIL PROTECTED]
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