News24

Museveni: I won't bow to strike pressure

2012-01-12 13:49

Kampala - Ugandan President Yoweri Museveni refused to yield under pressure to striking local traders demanding the authorities direct banks to stop raising interest rates, as retailers in the capital locked up their shops for a second day.

Museveni, whose administration cracked down on a wave of opposition-led protests against surging prices last year, urged a union of city traders to hold more talks with the government and banks.

"I will not accept pressure and confusion," Museveni was quoted as telling union leaders in a statement issued by his office.

"These strikes and confusion will harm our economy. There is no reason for resorting to strikes when we can discuss these issues amicably," Museveni said, according to the statement issued late on Wednesday.

Ugandan authorities are likely to be keen to prevent the low-level protest from escalating, especially as thousands have taken to the streets in Nigeria to protest against fuel subsidy cuts that have more than doubled the price of petrol.

Business owners in east Africa's third largest economy are angry about higher interest rates on their bank loans since mid last year, which they say are crippling their businesses.

Shopping malls in downtown Kampala remained shuttered and while many small kiosk owners sat idly outside their boarded-up stalls, determined to see through the planned three-day strike. Traffic in the city's usually congested streets flowed freely.

Monetary policy

The rise in interest rates followed a sharp tightening of monetary policy after inflation hit an 18-year high above 30% in October. The rate has eased in the last two months, falling to 27% in December.

Uganda's Bankers' Association told Reuters it would be impossible for commercial banks to consider lowering interest rates until the central Bank of Uganda cut its benchmark rate, now at 23%.

"I hate these banks and wish we could even close our shops for a month and we bring them to their knees so that they wake up and realise how important we are to them," boutique-owner Eunice Asiimwe told Reuters.

Museveni is due to meet union officials together with the central bank chief and commercial bank managers later on Thursday, his office said.

Uganda was rattled by a series of violent opposition-led protests last year over the soaring cost of living after inflation rose sharply, driven by high food prices.