[Uganda] Proposed stimulus measures do not go far enough

On June 4 in his State of the Nation address, President Museveni outlined measures that his government will implement to address the negative impact lockdown has had on Uganda’s economy. Daily Monitor reports on the strengths and weaknesses of the package.

The new measures are intended to put more money in the bank accounts of formal businesses, which is a positive. These entities are helped by the deferral of corporation tax, PAYE and contributions to the National Social Security Fund. 

The other measures, which include renegotiation of loan repayment schedules and access to cheaper loans from the recapitalised Uganda Development Bank, are also of benefit to formal businesses. Yet these benefits are almost to the exclusion of the informal businesses which comprise the majority of Uganda’s economy.

In the days before the package was announced, the debate about saving the economy was dominated by big private sector players, more minor players like smallholder farmers and informal traders were reportedly crowded out despite verifiable reports that these smaller players were severely hurt by the lockdown. 

Poultry farmers have had to sell their eggs and birds at around 60 per cent of their pre-pandemic prices and the farm-gate price for products like matooke plummeted by an estimated 65 per cent.

Small informal sector players working in non-food industries like textiles remained at home for over two months and many still have not returned to work. Their limited working capital supply has been exhausted and many must begin all over again.

People who work in malls and arcades have to manage the issue of rent for these months without work. Landlords are making demands for rent which traders rightly say they do not have the money to pay. This week the government said negotiations on how to resolve the matter are ongoing.

The rent issue demonstrates that the stimulus package, and the debate around, it was not broad enough to take into consideration the whole of the economy. Those who were worst hit were not at the fore, instead, the focus was on those able to make their voices heard.

The Daily Monitor argued that it will be hard to provide for everyone if the process continues to be ad hoc, with each group dealt with when its needs become most apparent. The debate should have been comprehensive from the start.

On June 4 in his State of the Nation address, President Museveni outlined measures that his government will implement to address the negative impact lockdown has had on Uganda’s economy. Daily Monitor reports on the strengths and weaknesses of the package.

The new measures are intended to put more money in the bank accounts of formal businesses, which is a positive. These entities are helped by the deferral of corporation tax, PAYE and contributions to the National Social Security Fund. 

The other measures, which include renegotiation of loan repayment schedules and access to cheaper loans from the recapitalised Uganda Development Bank, are also of benefit to formal businesses. Yet these benefits are almost to the exclusion of the informal businesses which comprise the majority of Uganda’s economy.

In the days before the package was announced, the debate about saving the economy was dominated by big private sector players, more minor players like smallholder farmers and informal traders were reportedly crowded out despite verifiable reports that these smaller players were severely hurt by the lockdown. 

Poultry farmers have had to sell their eggs and birds at around 60 per cent of their pre-pandemic prices and the farm-gate price for products like matooke plummeted by an estimated 65 per cent.

Small informal sector players working in non-food industries like textiles remained at home for over two months and many still have not returned to work. Their limited working capital supply has been exhausted and many must begin all over again.

People who work in malls and arcades have to manage the issue of rent for these months without work. Landlords are making demands for rent which traders rightly say they do not have the money to pay. This week the government said negotiations on how to resolve the matter are ongoing.

The rent issue demonstrates that the stimulus package, and the debate around, it was not broad enough to take into consideration the whole of the economy. Those who were worst hit were not at the fore, instead, the focus was on those able to make their voices heard.

The Daily Monitor argued that it will be hard to provide for everyone if the process continues to be ad hoc, with each group dealt with when its needs become most apparent. The debate should have been comprehensive from the start.