Bumba and ED

 

Researches from the Economic Policy Research Centre (EPRC) have advised the law makers to observe issues of equity and inclusivity while making policy interventions to contain the COVID-19 and the post pandemic recovery measures.

This was on Thursday June 25, 2020 during a presentation the   researchers made to the Parliamentary committee on national economy on the “Impact of Corona Virus on the Ugandan economy”. The team was led by the Executive Director EPRC, Dr.Sarah N.Ssewanyana while the meeting was chaired by the committee chairperson, Dr.Sarah Bumba(MP)Nakaseke District.

During the interface, the lead presenter Mr. Corti Paul Lakuma indicated that the centre had carried out a rapid assessment on the impact of Covid-19 two weeks into the partial lock down establishing that the measures put in place by government had contained the virus but hit the businesses very hard. The impact varied by enterprise sizes, location and location, Lakuma said, adding that Agriculture which employs over 62% of the population plus the informal enterprises were most affected. He sad the western region experienced drastic falls in the price of milk while the cattle markets were also closed.

Kasirye group

 Mr. Lakuma said  92% of the businesses had experienced high rise in expenditures occasioned by the measures and standard operating procedures having to spend on sanitizers, face masks, personal protective equipment, limited access transport and the curfew conditions reducing the working hours.

Commenting on the strategies to bail out the businesses, Mr. Lakuma said most of the proposals tend to favour the formal sector and are prone to administrative and sustainability challenges. He argued that for instance measures on access to loans and deferring interest repayment for commercial banks, suspended corporation tax, refund of VAT, deferring contribution to NSSF among others most favour the formal businesses at the expense of informal firms and most SMEs. ”The policy choices we make must observe equity, reduce inequalities to avoid conflict and social imbalance, “argued the researcher.

The presenter also argued that besides promoting inclusivity, systems of accountability for heavy expenditures like on emergency food,face masks, medical equipment and isolation centers need to be done in a transparent manner to maintain the confidence of the populace that has adhered to the measures.  

Responding to the presnetaton,the committee chair,Dr.Syda Bumba observed that the bail out  measures tended to concentrate on the formal business yet 70% of the businesses are informal and more vulnerable and the issue of microfinance access strategies ought to be emphasized. She also stressed that micro businesses failing to meet the commercial bank loan requirement were prone to exploitation from money lenders(sharks).She wondered why the commercial banks do not reciprocate the reduced Central Bank Rates (CBR) offered to them while borrowing to lower their lending rates which in double digits.

Paul parliamentsession

On safety nets,Dr.Bumba said programs like SAGE for the elderly which gives 25,000/ a month to the elderly ought to be reviewed to match with the current currency status because the rates were determined 10 years ago. She also called for monitoring of special funds for vulnerable groups including youths, women,PWDs who might not benefit from the bank incentives.

Mrs. Veronica Erabu women MP for Kaberamaido District observed that there is need for a one stop centre data bank about the businesses and their locations if government is to effectively bail them out lest the funds will go to non-deserving firms and individuals.EPRC’s Dr.Sewanyana responded that there was an ongoing effort to have such a data bank in the Ministry of Finance, Planning and Economic Development which needs to be expedited.

Other legislators called for disaggregated analysis of the impact on various regions of the country since some of them like Karamojong and the greater north have worse levels of population living under the poverty levels.

Msr.Paula Turyahikayo (Rubabo county)commended the multi sectoral approach in containing the impact of the corona virus on the economy but asked for evidence based research on  the effectiveness of the systems in Uganda so that that where there is weakness, it can addressed.

Mr. Thomas Tayebwa(Ruhinda North) called for assessment of the tax regime on businesses and investments saying the high taxes like 40% PAYE on salaries, high VAT on different products is a disincentive to business growth and recovery. While Kenya and Tanzania are reducing VAT and PAYE to single figures, Uganda is proposing to increase and introduce new taxes, he argued stating that it was not god for our competitive advantage in the region. Mr.Tayebwa also called for proper assessment of the external loans performance and in which priority sectors we should invest. He said the tenth parliament had approved over 30 loan requests by government .Supplementing his colleague’s argument, Mr.Aston Kajara(Mwenge South) disclosed that in fact  the 10th parliament had so far approved 52 loan requests worth  6 billion US dollars which is about 23 trillion shillings. The aggregate debt, Kajara said is about 13-14 billion dollars (52 Tn) shillings and yet loan repayment has a bearing on the economy particularly during such a crisis like Covid-19 pandemic. Hon.Pecos Kuteesa(UPDF) and Hon.Reagan Okumu called for quality data and analysis to inform evidence based policy choices.

Reagan okumu

Commenting on the request for disaggregated analysis, Dr.Sewanyana on EPRC informed the legislators that the centre was involved in the review of PRDP where findings point to issues of inequalities and thus the need for affirmative action for regions like northern Uganda. On education and ongoing distribution of learning materials, the Executive Director said education was one of the key interest areas for the centre research.

The EPRC team besides the ED and the presenter, included Dr.Ibrahim Kasirye the director research, Dr.Madina Guloba(micro-economics department),Dr.Francis Mwesigye(Sectoral department)and Mr. Nathan Sunday(Macro-economics).

End

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