KAMPALA, Uganda, 26th December 2016: Zimbabwe is a symbol for a terrible economy. Many of the country’s occupants celebrated Christmas on empty stomachs because of their unpractical currency. No need for detailing the reasons why Zimbabwe’s dollar lost that much value.
Uganda could be headed for the same fate should the government go through with the multi-billion project of establishing a German managed money printing plant in the country. The President, Finance minister Matia Kasaija and other government officials vouched for an unfamiliar company – Veridos Identity Solutions (GMBH) – to handle a joint venture contract with the Uganda Printing and Publishing Corporation. Many things could go wrong.
Having a printing plant in the country could risk leakage of printing material or knowledge to counterfeiters which would endanger the currency of the country – Governor Mutebile argued likewise. He and some other financing officials were against the project. De La Rue, a printing company in the UK that has been in charge of making the Ugandan shilling for 50 years, also vented its objections.
What exactly is the harm of having a money-making factory in this country? What comes to mind is hyperinflation like it happened in Zimbabwe. Uganda also had a phase of that sort of inflation and the governor’s solution was new notes. That meant that the bank could take in more money than it released into the economy – like India did.
Today, the use of cash payment is gradually dying out to make way for electronic payment. This condition lowers demand for cash which instead of cutting costs, Uganda’s own money printing firm will operate at losses in the long run. Already, the money that the central bank imports isn’t enough to require a home-based firm.
Besides, many countries with stable economies don’t manufacture their own money. Kenya had a printing firm established in their country. However, they still print their money using private firms out of the country. Having money made at home would mean more supply of it than demand for it. No one would enjoy carrying a barrel of money to buy breakfast. The face value of the money will be a lot less than its actual value. It isn’t good if funding for cheap projects is calculated using exponents.
The president should run the country with advice from the right people. When it comes to issues regarding the economy, Governor Mutebile is the right man to go to and not a bunch of politicians. Mutebile and his team have played an important role in the stability of this country’s economy, if he thinks something is out of line, government should reconsider.