Most businesses in Uganda far from being resilient – EPRC study

Uganda’s micro, small and medium enterprises (MSMEs) are “hanging in there” to see the next day with majority of them far from being resilient to the pandemic lockdown shock, a rapid assessment study by the Economic Policy Research Centre has established.

The assessment is part of a three-year study supported by the International Development Research Centre, Canada (IDRC) to examine the impact of the pandemic on the MSMEs in the country. The aim is to provide timely data to policymakers to respond accordingly.

Dr Francis Mwesigye, a senior research fellow at EPRC, said the assessment found that most MSMEs in Uganda, following the second lockdown, adopted key survival strategies including laying off workers, cost minimization and sleeping in markets for the vendors.

This came with consequences, the study noted. Some women that were sleeping in the markets had underlying conditions like asthma and were worsened as a result. Some of them were suffering from diseases like HIV/Aids and were unable to move to pick their medicines.

“We found many markets in Kampala didn’t have sanitary or hygienic public facilities. In one market, we found women were showering in the open and the only available facility which is private closes at 6pm,” Mwesigye said.

Dr Francis Abibi, the chief economist at the Uganda Development Bank, said at the launch of the report that they had been asking for business plans before offering loans to small businesses. They have, however, realised that many businesses don’t have plans but “we can design a small form which they can fill and quicken the process of getting money.”

An earlier assessment by EPRC had shown that extended lockdown meant that up to four million jobs had been lost. Enterprises like schools face the harshest realities with many expected to fold for good, a huge dent on the country’s education sector progress.

To cope with the situation, some vendors moved away from selling perishables like yellow bananas, avocado to the less perishables like green bananas.

A lot of them borrowed money from friends to push ahead. The lifting of lockdown on July 30 came as a blessing. The rapid survey asked MSMEs what would happen if the lockdown was extended; “majority said they would pack their things and go back home.”

“We have looked at most of the businesses we call SMEs and most of them don’t have collateral. Can we look at where they are located? If they don’t own the land there, how do we help them own it?”

According to Dr Mwesigye, what came out of the rapid survey was that the “pandemic has exposed the interlinkages between sectors.”

“The closure of any small business is disastrous to other related small businesses,” he said. “When you close a school, it is interdependent on very many other actors around it, e.g. suppliers of stationery, financial institutions that give schools loans, the transporters and the food market.”

The study found that some smaller businesses had supplied schools and had not been paid. This meant traders could not get their capital back.

Prof Julius Kiiza from Makerere University and a research associate with EPRC said what came out of the study was the fact that Covid-19 was not a simple public health crisis.