Uganda traders shut shops to protest soaring prices

Wed Jul 6, 2011 9:51am EDT

Related Topics

* Cost of goods too high, protesters want a fixed exchange rate

* Uganda rocked by violent demonstrations in April over prices

By Barry Malone

KAMPALA, July 6 (Reuters) - Shop owners in parts of Uganda shuttered their businesses on Wednesday to protest against a weakened currency and runaway inflation, the latest in a series of economic protests in the east African country this year.

Traders said they did not, as yet, plan any demonstrations in the country, which was plunged into chaos by protest marches over rising food and fuel prices in April.

"We have had to strike because the government has not listened to us when we tell them how hard it is for us to do business," Issa Sekito, spokesman for the Kampala City Traders Association, told Reuters.

"The shilling is too weak against the dollar and, while there are global factors, there are internal ones, too. Traders cannot work for charity anymore."

Sekito also said Chinese businessmen were draining the market of dollars, and that his association wanted the government to fix the exchange rate for three months.

Chinese businessmen own several large shops and restaurants in central Kampala and their numbers are growing, traders say.

"The Chinese traders are flushing the dollars out of the market in contravention to existing laws," he said without elaborating. He said the protest would last two days.

In central Kampala and surrounding markets, as well as in the town of Masaka in southwest Uganda, the majority of shops and restaurants were closed and the streets were quieter than usual as the protest kicked off.

Armed riot and military police patrolled the streets in small groups and trucks containing tear gas stood guard on street corners considered protest flashpoints in the past.

During the price protests in April, nine unarmed people were shot dead by security forces, according to Human Rights Watch.

The immediate impact of the traders' strike was a rise in the price of staples like sugar and salt in Kampala. The price of kilo of sugar had risen by up to 21 percent to 3,500 Ugandan shillings ($1.35) since Monday, residents said.

"It is hard, hard to live now because things are too expensive. But I don't blame the shopkeepers, they are suffering, too. I blame the government," said Linda Ssempijja, 23, a housekeeper speaking on a shuttered street.

The shilling has been weak against the dollar in recent months, and slipped to a record low of 2,710 on June 30 against the U.S. currency before the central bank stepped in to prop it up.

On Wednesday, the central bank launched a benchmark lending rate of 13 percent and a 5 percent core inflation target in a bid to tame prices which pushed inflation to a 17-year high in May.

Analysts said it might take time for the Ugandan shilling to respond, but the action could help the currency recover from the lows against the dollar.

In a sign of spreading discontent against the government, some traders blamed President Yoweri Museveni for the situation, but the leader, in power since 1986, has said drought was the cause of high food costs and soaring world oil prices.

"Nobody has money except one family in this country that has money and that's Museveni's family," Motovu Felix, who owns a sporting goods shop, told Reuters. "I can't afford to import stock anymore and people can't afford to buy it either."

(Editing by James Macharia and Elizabeth Fullerton)

(For more Reuters Africa coverage and to have your say on the top issues, visit:af.reuters.com) ($1=2590.0 Ugandan Shilling)

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