The Impact of Inflation and Changing Exchange Rates in East Africa

 

If you are doing work in Sub Saharan Africa it should not be a surprise that inflation is on the rise, causing construction projects and operating expenses to come in over budget.   

We made an attempt to quantify the increase in inflation and also the increase in the exchange rate in US currency to Kenyan, Ugandan, Tanzanian and Rwanda’s currency.   

Just a quick synopsis, Uganda’s inflation rate is trending at 30% per year, while the currency versus the US dollar has depreciated about 20% since April.  If you are doing work in Uganda, Kenya and Tanzania your purchasing power has substantially decreased according to above graphs.

We are not economists but it looks like this trend is going to continue and you should plan for high inflation in your 2012 budget.  It can also be good conversation with your donors, as you will have to increase fundraising to account for higher inflation. 

Efforts can also be made to purchase products quickly as they will likely be more expensive in the future.  This is just a snapshot of countries in Sub Saharan Africa but other countries are likely facing similar challenges. 

Rwanda continues to be incredibly stable.