Major clothing stores in Kampala forecast low sales this season because of the depreciation of the shilling.
Since the beginning of the year the Ugandan shilling has fallen against the dollar with minimal gains made over the months due to Central Bank intervention and a yo-yoing economy.
Four of the largest boutiques in Kampala say growth this year has been particularly challenging due to this. Select Garments, Wina Classic, Man About Town and Sylvia Owori are all struggling to maintain the supply of their products while dealing with low consumer interest.
Jenin Mpuwire, Marketing Manager of Select Garments, says it is hard to sustain market-friendly prices in the midst of depreciation. She gives the example of corporate men's suits, which have sold for 500,000 shillings for the past three years because of fear of raising prices to suit the challenges in the currency market.
The shilling to dollar rate today is between 2,285 to 2,300 shillings, compared to 1,750 shillings two years ago.
Peace Menya, personal assistant to Sylvia Owori, says her boutique at the up market mall, Garden City, is also suffering from the depreciation of the shilling. She says the store has to find a balance between setting customer-friendly prices and dealing with supply expenses.
Menya says the boutique has been forced to raise some of its prices with dire outcomes. Last season's clothes are still hanging in the store and Sylvia Owori has been forced to hold multiple sales to get rid of stock.
Sarah Ntumwa, sales officer at Man About Town, says her boutique is facing similar challenges. She says the current dilemma in approaching the Christmas season is how to keep customers interested in their products regardless of the economic situation. She says plans have been made to offer sales during the season, but cannot predict the outcome if the sudden rise or fall of the shilling occurs in coming weeks.
A Bank of Uganda report for October says the bilateral shilling to dollar rate depreciated by 0.9 percent in September. In October this was down to 0.6 percent. The depreciation was largely driven by dollar gains globally and demand by commercial banks and domestic corporations for foreign currency.
The Nominal Effective Exchange Rate also depreciated in a manner equivalent with the depreciation of the bilateral shilling to dollar rate. This indicates that the shilling has weakened against almost all currencies of Uganda's trading partners.
The Nominal Effective Exchange Rate is the unadjusted weighted average value of a country's currency in relation to all major currencies of the country's trading partners.