The Government of Uganda represented by the Ministry of Trade Industry and Cooperatives, Makerere University and Uganda Revenue Authority (URA) along with the United Nations Capital Development Fund (UNCDF) today launched the Uganda Business Impact Survey 2020

The report, which incorporates responses from over 1,000 firms, demonstrates the impact of COVID-19 on small and medium enterprises (SMEs) in Uganda. The report also makes recommendations on how local businesses can be supported to relieve them of the negative effects of the pandemic and accelerate economic recovery.

The report is being published at a time when Uganda has moved to ease the lockdown restrictions by allowing a few businesses to reopen subject to government delivering face masks. The country has been in a lockdown for over 45 days and only businesses providing essential services such as food markets and grocery shops remained open. Since the nationwide lockdown commenced, business operations have significantly slowed down.
Insights from the survey show that:

• The downward pressure of declining production due to a reduced workforce and slowing demand has forced companies to look for ways to reduce their operating expenses including labour. 62.3 percent of the respondent companies are considering or have already started cutting jobs.
• Ugandan companies are fragile and have a relatively low cash flow. Only about 15 percent of surveyed companies can sustain more than three months of operation on their current cash flow.
• Some industries expect an increase of over 30 percent in the cost of inputs and operating costs. These include manufacturing, production and payment of utilities (electricity, heat, gas and water), where 45 percent of companies expect an increase of more than 10 percent.
• Use of digital solutions is the most popular adaptation measure yet uptake is low with only 40 percent of all companies using online channels.

The report highlights how the pandemic has not only affected business operations during the lockdown period but will continue to affect operations even when the lockdown is lifted. Recovery for most businesses is expected to take more than three months and possibly until the end of the year. 70 percent of the respondent businesses estimate a recovery time of more than three months.

While presenting the report, Head of UNCDF in Uganda Office Dmitry Pozhidaev urged business owners to be innovative, “by definition a business involves risks and not all risks can and should be covered by government, businesses need to innovate to stay afloat.”

While presenting the report, Head of UNCDF in Uganda Office Dmitry Pozhidaev urged business owners to be innovative, “by definition a business involves risks and not all risks can and should be covered by government, businesses need to innovate to stay afloat.”

Some sectors like the tourism industry, which started slowing down in January and all but stopped in early February, does not expect to recover until over a year from now, bringing full recovery to sometime next year.
Building on the projected recovery expectations, the report provides recommendations to support business recovery and survival.

One of the most prominent is the need for the government to provide a proper relief and economic stimulus package that would define all government measures in support of businesses through an act of parliament. The relief package would set a reduction in utility fees or rental costs, extension of the period for submitting tax returns or duration of tax holidays, staff wage entitlements, access to affordable capital and others.

“This study is timely, as government has just constituted a Post COVID-19 Economic Recovery High Level Committee to develop strategies of mitigating the impact of COVID -19. The study findings and recommendations will inform the appropriate policy actions during the recovery phase,” Hon. Amelia Kyambadde Minister of Trade Industry and Cooperatives.

In Uganda, UNCDF is working with SMEs to promote innovation and investment that will encourage small businesses and consumers to embrace digital platforms in their daily lives for growth and sustainability. In April 2020, UNCDF announced a partnership with SafeBoda to provide an e-commerce platform connecting market vendors to customers during the ongoing COVID-19 lockdown and beyond. In addition, under the Development Initiative for Northern Uganda (DINU) programme through the Support to Agricultural Revitalization and Transformation (START) Facility, UNCDF is working to establish a recovery fund to support 40 SMEs engaged in agri-business value addition in Northern Uganda to address their liquidity shortfalls.

About UNCDF
The UN Capital Development Fund makes public and private finance work for the poor in the world’s 47 least developed countries (LDCs).

UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. UNCDF pursues innovative financing solutions through: (1) financial inclusion, which expands the opportunities for individuals, households, and small and medium-sized enterprises to participate in the local economy, while also providing differentiated products for women and men so they can climb out of poverty and manage their financial lives; (2) local development finance, which shows how fiscal decentralization, innovative municipal finance, and structured project finance can drive public and private funding that underpins local economic expansion, women’s economic empowerment, climate adaptation, and sustainable development; and (3) a least developed countries investment platform that deploys a tailored set of financial instruments to a growing pipeline of impactful projects in the “missing middle".

About Ministry of Trade Industry and Cooperatives
The Ministry of Trade, Industry and Cooperatives (MoTIC) is entrusted with the responsibility to formulate, review and support policies, strategies, plans and programmes that promote and ensure expansion and diversification of trade, cooperatives, environmentally sustainable industrialisation, appropriate technology development and transfer to generate wealth for poverty eradication and benefit the country socially and economically. The vision of the Ministry is: “Sustainable cooperatives, competitive trade and world class industrial products and services”. The mission of the Ministry is: “To develop and promote a competitive and export-led Private Sector through accelerating industrial development for economic growth.”

About Makerere University (College of Business and Management Sciences [CoBAMs])
The College of Business and Management Sciences (CoBAMS) of Makerere University aspires to be a leading institution of academic excellence and innovations in Africa in its area of expertise. Its mission is to produce high calibre professionals and promote research and knowledge transfer in Economics, Statistics, Business Management and Population Sciences, for informed policy and sustainable development. CoBAMS is mandated to teach and undertake research in the following areas: Actuarial Sciences, Business, Economics, Management, Statistics and Population Studies.

About Uganda Revenue Authority
The Uganda Revenue Authority (URA) is a government revenue collection agency established by the Parliament of Uganda. Operating under the Ministry of Finance, Planning and Economic Development, the URA is responsible for enforcing, assessing, collecting, and accounting for the various tax revenues (including non-tax revenues) imposed in Uganda and to provide advice to government on matters of policy relating to all revenue sources. Its strategic direction is to cultivate a taxpaying culture through provision of reliable services, leadership development and building strategic partnerships.