Two years after all COVID-19 pandemic restrictions were lifted, many Micro, Small and Medium-sized Enterprises (MSMEs) in Uganda continue to grapple with the after-effects as recovery drags.
Economic Policy Research Centre (EPRC) interacted with enterprises leaders in Mbale in Eastern Uganda and Fort Portal in Western Uganda in January and February. The interactions were organized as part of the regional dissemination outreaches for our studies on the COVID-19 impact on MSMEs in the country.
In Mbale participants said some businesses that made supplies to schools after the pandemic have not been paid back. This means that even after schools open, education institutions are struggling to get back to their pre-pandemic health.
Also, business owners saw more foreclosures in the immediate aftermath of the pandemic as creditors rushed to recover their monies when government freeze on loan recoveries ended.
The most highlighted concern was that even as businesses struggle to recover from the shock, they have not been given relief on taxes. Participants in Mbale said they were being asked to pay many levies to both the local government and the national tax body but hardly understood them. They said at this time when businesses were emerging from a major shock, the government can help us reduce on taxes.
Micro, small and medium-sized enterprises leaders participate in a workshop in Fort Portal in February. Photo/EPRC
Even as government put up initiatives to help businesses recover, these remined majorly unknown beyond Kampala.
“We need to be sensitized about the measures that government put up. [It’s only today that], we learn that Uganda Development Bank (UDB) has money [to give enterprises], but we didn’t know – that means there is information discrimination. We need to be sensitized on how to go about the issues,” a participant said.
The government set up a Small Business Recovery Fund (SBRF) Shs 200bn in 2021to facilitate the provision of loans to small businesses that suffered financial distress arising from the effects of the COVID–19 pandemic. Very few have been able to access these funds.
“People are not aware that that money even exists. People don’t know where the money is and how to access it. This means the government has not put in effort to create awareness about existence of affordable funds,” a participant in Fort Portal said.
Ms. Betty Mujungu
No revenues
In Fort Portal, business leaders reported that the first challenge that held them back after COVID-19 was the outbreak of Ebola. This further deepened the troubles that saw both foreign and local tourists postpone their travel plans.
On the other hand, local revenues were also impacted by the pandemic as businesses struggled to recover. For instance, Fort Portal City leaders said that before the pandemic, in 2018, they raised about 2.3bn shilling annually in local revenues. In 2020/21, it reduced to Shs 1bn. In 2022, it was about Shs1.2bn
“We feel that if there was no COVID-19 that interrupted businesses, local revenue would have gone up to about 4bn shillings by now. When the business is good, revenues to local government [level] go up and social services are extended to local communities. If we’re collecting money from your space, we should be able to give you services in return,” said Ms. Betty Mujungu, the Deputy Mayor of Fort Portal City