Bank of Uganda moves to replace Shs1,000 paper note

Bank of Uganda has said it plans to replace Shs1,000 paper banknotes with coins. 

According to the Executive Director for Research at Bank of Uganda, Dr Adam Mugume, this is intended to cut the costs of printing.  

“The entire Shs1000 note will be gradually withdrawn. The notes are heavily used in transactions and, therefore, soiled heavily, which renders them unusable or reduces their lifespan. We have to reprint them frequently, yet the cost of printing relative to value is quite high,” he is quoted by Daily Monitor newspaper as saying on Thursday.

Dr Mugume added that after the 1,000 note, they may consider other paper notes, implying Shs2,000 note.

Since 2012, the Shs1,000 coin has been used alongside that of paper while other notes going below are now all in coin form.

Dr Mugume, representing the Deputy Governor, and Finance Minister Matia Kasaija, had on June written to the International Monetary Fund (IMF) Fourth Review for Uganda indicating that a cost-benefit analysis over the matter was being carried out.

 “Given high currency printing costs, we have conducted a market study to compare printing costs, and a cost-benefit analysis of replacing low denomination banknotes with coins,” the duo is quoted as saying.

In the 2021/22 Annual Report, Bank of Uganda indicated the cost of issuing currency, among which included printing and circulation, had gone up, increasing by Shs24.4b or 16.5 percent in the period.

For instance, the report noted currency-related costs had increased from Shs147.5b during the 2020/21 financial year to Shs171.9b due to a rise in demand for cash following reopening of the economy and the rise in inflation.