International and national experts have highlighted the importance of data driven evidence in formulating policies on the building resilience of Micro Small and Medium Enterprises (MSMEs) in Uganda. This was during the launch of  three year study on the theme The MSMEs resilience and recovery in the face of the COVID 19 pandemic”  at an e-conference organized by EPRC and IDRC on September8,2020 in Kampala.

The experts discussed the role of MSMEs in the domestic economy and effect of the pandemic on their operations, adequacy and sustainability of planned and existing stimulus packages, role of evidence in identifying MSMEs and informing the design of measures of the government response, social and economic recovery and response from COVID 19 imitative by IDRC and the social economic impacts of COVID 19 on business enterprises in Uganda: from mitigation to the promotion of post pandemic resilience.

 Dr. Paul Okwi, Senior Programmes specialist, IDRC highlighted the importance of data driven evidence in formulating policies on the building resilience of MSMEs in Uganda. He emphasized that government needs to ensure that policies are formulated based on evidence from data

 

He observed that COVID 19 had hit MSMEs the hardest especially the hawkers, self-employed, vendors and roadside sellers. Despite them being the engine of growth of the economy, these MSMEs are located in hard to reach areas and most of them are informal therefore hard to identify, as such data is not available and this is the real problem.

Government introduced stimulus package for the MSMEs but there are no comprehensive data sets to inform policy interventions given the different dynamics these businesses have. This lack of evidence brings discrepancy between evidence and policy. He pointed out that the problem therefore is not money but evidence to direct money to the right groups. He emphasized that due to lack of evidence it’s the large firms that my benefit from the stimulus packages meant for MSMEs.

Dr Okwi added that the study by EPRC should look at the evidence that is measurable, actionable, timely, rigorous, nonpolitical and easy to understand in terms of development policy. It also needs to bring on board community participation, ownership and support.

He noted that evidence based policies does not guarantee effective implementation hence the need for continuous government follow-up for uptake. There is need to follow up with impact evaluation to ensure, efficiency and effectiveness to save massive layoffs and MSMEs mortality (3.8 million jobs lost temporarily and 0.6 million jobs are lost permanently as well as guide future interventions.

 Dr Arjan De Haan, Director IDRC’s inclusive economies program disclosed that his organisation

(IDRC) together with her 40 partners around the world were conducting a study on COVID 19 effects on the SERRC. He further highlighted that partnerships such as one with EPRC were important given the local context evidence these partners already have in the various countries in African and Asia.

He observed further that that the country specific studies by the partners are key in informing policy interventions on what works in building resilience of MSMEs in the face of COVID 19 pandemic. These models/interventions should be actionable and measureable for impact measurement and scale up

 Dr. Abibi Francis, Chief Economist Uganda Development Bank (UDB) said the

Interventions by the government were intended to support efforts to deliver MSMEs from the challenges presented by COVID 19 and beyond.

He stressed that the interventions by the bank are informed by the NDP III and targets MSMEs in the key sectors of Agro industrialization (Agriculture and industry), trade and tourism given the backward and forward linkages presented by these sectors that is through promotion of employment and reduction of poverty.

Dr. Abibi emphasized that assessment of development impact is very critical for one to get stimulus package/for a project to get financed. He also highlighted that special packages were being designed for women and youth to ensure inclusiveness.

He indicated that since UDB is a development finance institution, its project funding assessments considers gender and youth inclusion in order to foster inclusive and equitable growth and poverty reduction. He further indicated the Bank’s research/evidence needs would revolve around providing evidence on the overall poverty profile in the country as well as the evidence on potential areas of investment with the highest returns that can stimulate the economy

 Mr. Gideon Badagawa, Executive Director Private sector Foundation Uganda (PSFU) equally emphasized the role of evidence in formulating sound economic policies that will stimulate output and economic growth especially in the private sector. He noted that policy reasoning and evidence are key to wake up policy makers to respond to the challenges presented by the COVID 19 in the country

He averred that 80-90% of MSMEs are in informal setting, there is no data on their production and sales volume, the level of skills, who they employ, where they sell and standards compliance in the sector yet these would be key in informing policy interventions to support these MSMEs. He warned that if this information remains unavailable, government efforts to cushion MSMEs will be futile.

The PSFU boss further emphasized the role of building multi-sectoral linkages and partnerships in the MSME ecosystem among the various MDAs and other stakeholders to provide support services such as business licensing, financial services and linkage to markets for these enterprises.

On the research needs, he indicated that PSFU and private sector as a whole would be interested in evidence/data on markets, and the what commodities are needed in these markets to inform the import substitution strategy through the Buy Uganda Build Uganda policy

From the Ministry of Finance, Planning and Economic Development (MFPEP) Mr. Richard Jabo, a principal economist revealed that  Government had  provided stimulus package through two main approaches of fiscal and monetary policies however it is exploring other interventions to build resilience of MSMEs. With respect to the monetary policy; a number of measures have been put in place that include loan deferment, rescheduling and interest rate reduction to enable low cost borrowing by MSMEs from the commercial banks. On the other hand, through the fiscal policy, VAT and PAYE deferment measures have been adopted to solve the temporary liquidity challenges of these enterprises

To provide low interest credit to businesses, MSMEs inclusive, he indicated that Uganda Development Bank (UDB) had been recapitalized to the tune of 1 trillion with a focus on businesses in the key sectors of agriculture, industry and tourism.

As regards the research needs to inform policy on MSMEs, Mr. Jabo implored EPRC to provide evidence on the impact of the locust invasion, upcoming elections on exacerbating the challenges presented by COVID 19 on MSMEs.

On her part, Dr. Sarah Ssewanyana Sarah, the Executive Director EPRC noted that MSMEs account for 90% of the employment, growth and poverty reduction and have suffered most in the COVID 19 pandemic. Given that most women are predominantly employed in these informal enterprises, this is likely to worsen the already existing gender inequalities in the country

She said the National statistical system has no data on these MSMEs hence investing in expansion data collection system on MSMEs is a worthwhile and timely investment. She stressed that although a stimulus package has been rolled out by government, this support was likely to benefit a few medium and large scale enterprises.

Accordingly, providing evidence will assess the effects of the interventions on the MSMEs, particularly on how MSME operations are being impacted by the stimulus packages, she argued. She said the   EPRC research will also investigate the mortality rates of MSMEs before and after COVID pandemic to clearly determine the impact of the interventions. The study will inform the learning agenda on what works for MSMSEs in times of crises like COVID 19 or other crises. To enhance uptake of the policy findings, the study will involve establishing a steering committee chaired by Ministry of trade industry and cooperatives, PSFU and other stakeholders

Dr. Joshua Mutambi, the Commissioner of SMEs and marketing, Ministry of Trade Industry and Cooperatives (MTIC) who represented the minister. Hon. Amelia Kyambadde said that government through the stimulus packages had intervened to help MSMEs to cope up with challenges presented by the COVID 19 given their role in promoting economic growth and poverty eradication.  Further, he noted that businesses were adopting self-initiative such as digital technologies to help them keep afloat

Consequently, this study is timely to assess the impact of the COVID 19 stimulus packages, the strategies the MSMEs have adopted to remain resilient to the impact of the pandemic and also provide insights into how BUBU can be leveraged on to build MSMEs resilience. He indicated that the ministry was expectant of the policy recommendations as a result of the study to guide policy formulation

Dr. Lawrence Bategeka, the vice chairperson Parliament's committee on Finance said macroeconomic policies should shift focus to employment generation not only on controlling inflation and macroeconomic stabilization.  Dr.Bategeka said government policies should focus now on interventions that will increase employment.

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