By Corti Paul Lakuma, Research Analyst &  Lawrence Bategeka Principal Research Fellow EPRC On Saturday 21 of September 2013 terrorists-Alshabab, attacked and took hostages in # Westgate shopping mall located in an upscale West Nairobi community.  The fact that Westgate is frequented, mainly, by up market Kenyan shoppers and expatriates suggest that the terrorist hit at, arguably, one of the symbols of East Africa’s upcoming consumerism that is attracting local and foreign investments in the manufacturing and service sectors and ambitious real estate and infrastructural projects. The likely effect of such an attack on Uganda may be reflected in upward pressure on head line inflation to a double digit from the 7.3% predicted in August, 2013. Short run Instability in Tourism Cogently, the predicted rise in headline inflation may be explained by short run disequilibrium in the tourism sector as the number of tourist from the West and East reduce in respons...

By  Alex Thomas Ijjo, PhD Senior Research Fellow EPRC Regional integration in Africa holds the key to increasing intra-African trade and growing economies across the continent.   In fact, there is evidence of trade creation in relation to the East African Community’s (EAC) integration, according to a forthcoming study by Shinyekwa and Othieno of Economic Policy Research Centre (EPRC).   The researchers not only find that trade will increase, but that regional trade will grow in importance relative to trade with traditional partners such as the US and the EU.   Economic integration among countries with similar economic characteristics has been questioned by conventional trade wisdom in the belief that such integration arrangements are more likely to “divert” rather than “create” trade among the partner states. This school of thinking fueled doubts regarding the trade prospects entailed in “South-South” regional integration initiatives. In addition, intra-Afri...

Inflation in Uganda has lately increased from 3.4 percent in April to 7.3 percent in August 2013. The surge in inflation has come on the backdrop of a prolonged drought that affected food production and resulted in poor harvests across the country.  Food Inflation The food supply shock has been exacerbated by the seasonal demand for seeds as the planting season starts. Thus food and cereal prices have started to increase and this has fed into higher inflation. For example, the average price for a kilogram of beans is now Ushs 2,500 compared to Ushs 1,500 two months ago. However, food inflation can feed into core inflation (that excludes food, energy and utilities prices) directly through its effect on the prices of processed food, cost push effects and inflation expectations for example through hoarding and speculative tendencies. Indeed increases in food inflation from -7.5 (minus 7.5) percent in April 2013 to 13 percent in August 2013 have been followed by increases...