In 1998, two years after President Museveni won the first of six and counting elective terms, the central bank introduced the Shs50 coin. Together with the Shs100, Shs200, and Shs500 coins, it was part of a new series of denominations, following the one issued in 1987, and it was intended to combat inflation. With Ugandans preparing to go to the polls next week, Philip Matogo looks at how the coins, intended to curb price increases, have fared.
On November 12, 2025, the US Mint officially ceased production of the one-cent coin (penny), ending 232 years of circulation to cut costs, as each penny cost about four cents to produce. While existing pennies remain legal tender, the move eliminates new production of the coin, saving an estimated $56 million (Shs201.4 billion) annually.
US businesses are increasingly adopting ‘nearest-nickel’ rounding for cash transactions only. For example, a total of $1.02 (Shs3,669.7) would round down to $1.00 (Shs3,597.75), while $1.03 (Shs3,705.68) would round up to $1.05 (Shs3,777.64). However, electronic payments (debit/credit cards, mobile wallets) are not affected and will continue to be charged to the exact cent.
While Americans are punning about how this move makes ‘cents’ (read sense), the smart money in Uganda points to our economy following suit. The Ugandan penny or coin has been losing real value over the years. Indeed, a coin’s purchasing power is poorly adjusted to changes in the price level, specifically inflation or deflation. This is not good. Since, even in America, top rapper 50 Cent (real name Curtis Jackson) thought about adjusting his name to inflation.
He humorously calculated the purchasing power of ’50 cents’ in the year he started his career (or was born) would be worth today, suggesting names like ’85 Cent,’ ‘109 Cent,’ or even ‘$2.50’ to reflect the diminished value of the dollar over time. Uganda may have to make similar considerations.
Falling value
In the late ’90s, a Shs50 coin could fetch chewing gums such as Orbit or Big G (both made by the East African Wrigley Company). That’s why before a group of friends would start their day together, they would invariably buy chewing gum for everybody. Today, Orbit is known as PK and you can’t purchase it for anything less than Shs200.
At any rate, the value of the coin has reduced significantly over the years. So, what if Uganda also ditched the coin? Some economists I spoke to say the disappearance of small-denomination coins such as the US penny, has a negligible impact on overall inflation because broad economic forces like labour costs and money supply, not tiny rounding rules, drive inflation. This may not be entirely true. If I could buy chewing gum in the past for a fraction of what I can buy chewing gum for today, then the coins full disappearance will see the cost of chewing gum rounded off to the nearest note currency shilling. This means chewing gum will likely cost Shs1,000.
Many Ugandans tend to chew gum like Sir Alex Ferguson, who is estimated to have chewed at least 3,000 packets of chewing gum during his 26-year tenure as Manchester United manager. Throughout his 1,500 matches in charge, he was notorious for chewing gum on the sidelines to manage stress and, at times, aggressively express tension during games. That’s about Shs3m worth of chewing gum, if the price of PK is rounded off to the nearest note currency shilling.
Taxis, bodas and booze
In the ’90s, one could board a taxi for Shs500 from Makindye to the Old Taxi Park. Then grab another taxi from the park to Muyenga for about Shs1,000. Sometimes, it could be Shs700. That means with Shs3,000, one could go from Makindye to Muyenga and back for a song, as it were. Today, you’d be hard-pressed to find a taxi that can take you for less than Shs1,000, even if you’re going from Ntinda to Bukoto.
Before commercial motorcyclists came on the scene, the boda bodas were bicycles. They cost anywhere from Shs200 to Shs500 as long as your journey did not exceed two kilometres. Then the motorbikes came in and suddenly, we found ourselves paying Shs500 to Shs1,000 for the same route. This counting of pennies did not make us pound foolish, so to speak.
Beer was retailed at Shs2,000 in 1997. With Shs10,000, then, one could buy more than one row in a crate of beers. In fact, a crate was about Shs25,000 wholesale. Say you went to a place like Yakobo’s Pork Joint, previously located where Fraine Supermarket Ntinda is today, and ordered some ‘past presidents.’ That was cultural shorthand for pork, thanks to President Museveni’s colourful description of Uganda’s former presidents. Anyway, the pork was Shs2,500 per stick and their beer was about the same price. If you had Shs30,000 on you, you could party until the evening adjourned itself to dawn.
The coin of vantage
The coins added to the overall cost of items, specifically the Shs500 on pork or beer, were like an unspoken compromise struck between the seller and buyer. The seller, by adding a Shs500 markup on the beer and pork, was triggering in the buyer intense psychological reactions serving as a ‘hook’ that overrides rational thinking, stimulating a dopamine-driven ‘reward’ response in the buyer for only having to pay a paltry Shs500. It’s a bait and sell tactic used by a certain bookshop in town.
Pricing their books at Shs99,999 or Shs99 is a powerful psychological strategy known as ‘charm pricing,’ designed to make products feel significantly cheaper. It leverages the ‘left-digit effect,’ where consumers subconsciously anchor on the first digit (99,999) rather than rounding up to the next whole number (100,000), despite the one-cent or Shs1 difference. Coins are essential to charm pricing.
Sodas and chocolates
At Makerere University in the late ’90s, male students of a romantic cast of mind would often buy their love interests soda or chocolate. It would sweeten the proposition of boy and girl falling in love. These were also digestifs or aperitifs, taken before one would ‘roll’ down to Wandegeya for the grand meal: chicken and chips. The chicken was between Shs2,000 and Shs3,500 and the chips about Shs1,000. Shs10,000 could give you major dating ‘street cred’ with the ladies. Even if you decided to take her out to town, the taxi ride from Wandegeya to Pioneer Mall in the City Centre was Shs500 per head. Clearly, as you can surely see, pennies turned one into a Penny Lover.
Dating was a lot cheaper in the ’90s. Everything was within reach, it seemed. Even the cost of Cadbury chocolate would not exceed Shs4,000. So, campus girls put on weight, in the right places, thanks to all the fast foods, chocolates and soda they could get from penny-happy boyfriends.
No more bargains
If the Ugandan government decides to do away with the coin, the perception of a bargain may go with it. To be sure, prices ending in 99 cents are often associated with sales, discounts, or a good deal, which encourages quicker purchase decisions. If there are no coins to execute this obvious financial trick, businesses like the bookshop I mentioned earlier are likely to be affected. It felt better buying that book somewhere at Shs299,999, but Shs300,000 is asking for a little too much.
If there are no more coins, impulse buys will also take a hit. As you might be aware, low-cost or impulse-buy are based on saving every penny. Including pennies in the price of an item makes it look marginally cheaper and thus motivates consumers to purchase it without much rational thought because the price appears very affordable.
One cannot impulsively make a decision on what to buy when the cost of what one seeks to buy is not for the impulsive but for the seemingly rich.
The vanishing of coins in the Ugandan economy is likely to expose many companies for what they truly are. Retailers use the illusion of reduced costs by using pennies to create an image of offering the lowest possible price or a competitive deal, which influences consumer behaviour even if the Shs1 or so difference is negligible. Without coins or pennies, buyers are likely to bemoan more about an expensive economy; yet the doing away with coins will make that reality less financially painful than one thinks.
Steady progress
There is another way to look at the potential disappearance of coins from the market. Coins are largely used to buy what in economics are known as inferior goods. These are products for which demand decreases as consumer income rises. Unlike “normal goods,” where demand grows alongside wealth, inferior goods are often lower-cost alternatives that people stop buying once they can afford more expensive substitutes.
In terms of inferior goods, rolexes replace tacos, cassava replaces chips and kikomando is preferred to an English Breakfast or katogo. If Uganda no longer has use for coins, inferior goods will become slightly more expensive as a Rolex will not be found for Shs1,500. It will be upwards of Shs2,000 or Shs3,000. Overall, the economy (with regard to snacks) will seem pimped up, as it were, to serve richer Ugandans. This could lead to what is known in economics as conspicuous consumption, the practice of purchasing and using goods or services of a higher quality, price, or quantity than practical to publicly display economic power and social status. Thereby, increasing consumerism as the pennywise we become more pound foolish.
Background
In June 2023, Bank of Uganda told the International Monetary Fund (IMF) that it was conducting a cost-benefit analysis to replace low-denomination notes with coins.
A letter of Intent signed by Finance Minister Matia Kasaija and Bank of Uganda Executive Director Research Adam Mugume noted that printing costs for banknotes had escalated, necessitating a study to see which ones can be replaced with coins.
In a subsequent interview, Mugume said they would start with the Shs1,000 note, and move on to others.
That was slightly over two years ago. Even as Mugume had noted that the procurement process had been put in place, the note remains in circulation.
In fact, in another letter to the IMF in April last year, Bank of Uganda recommitted itself in response to an IMF recommendation to cut the cost of money.
The process seemed, gauging from the commitments above, to be on track, but now seems to be hanging.
Why? Because the cost comparison has since tilted in favour of bank notes, unlike before when coining seemed to sway decision makers.
Bank of Uganda insists that the plan is still on the table, but without timelines.