Former National Resistance Movement (NRM) vice chairperson and businessman Mike Mukula has called for a policy debate on the growing practice of landlords in Uganda charging rent in US dollars.
Mukula argued that the practice was placing an unfair foreign-exchange burden on tenants and local businesses whose incomes are largely earned in Uganda shillings.
In a statement, Mukula questioned why Ugandans should be required to pay rent in dollars despite earning salaries, conducting most transactions and paying taxes in the local currency.
“There is something fundamentally wrong when Ugandans earn in shillings, trade largely in shillings, pay taxes in shillings but are increasingly required to pay rent in US dollars,” he said.
Mukula said dollar-denominated rents expose tenants to currency fluctuations that are beyond their control. He argued that when the shilling loses value against the dollar, the cost of rent rises in local-currency terms even when a tenant’s salary or business revenue remains unchanged.
According to Mukula, the impact extends beyond individual tenants and could contribute to higher operating costs for businesses.
“Why should an ordinary tenant or local business carry the landlord’s foreign-exchange risk?” he asked.
He warned that the continued depreciation of the shilling against the US dollar can effectively increase rental costs overnight for people and businesses whose earnings remain in shillings.
Mukula said this reduces disposable income for households while putting additional pressure on businesses already dealing with other operating expenses.
For businesses, he argued, higher rental costs could eventually be reflected in the prices of goods and services as operators seek to recover increased expenses.
The former NRM official described the trend as “creeping dollarisation” of Uganda’s domestic economy and said it warranted closer attention from policymakers and economic stakeholders.
He argued that strengthening confidence in the Uganda shilling should include examining how everyday goods and services are priced within the country.
“The Uganda shilling is our national currency,” Mukula said, adding that there was a strong economic case for properties located in Uganda and serving predominantly Ugandan tenants to have their rents quoted and settled in shillings.
His remarks come amid broader concerns over the impact of exchange-rate movements on the cost of living and the operating environment for businesses.
Dollar-denominated contracts can provide landlords with protection against currency depreciation, but they also transfer the risk to tenants whose earnings are not linked to the US dollar.
Mukula maintained that Uganda could not strengthen confidence in its national currency while increasingly pricing essential aspects of domestic economic activity in a foreign currency.
“We cannot strengthen confidence in our currency while progressively pricing everyday life in somebody else’s currency,” he said.