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Company closures, travel bans dampen business mood – Survey

 

Kampala, Uganda | THE INDEPENDENT | The business environment worsened in April with company owners not hoping for quick recovery anytime soon according to the April Purchase Managers Index (PMI).

The survey which asks business managers about their operations said in a report for April that business activity came crashing to near zero as businesses closed down to follow coronavirus guidelines. Company closures, a lack of new orders and restrictions on travel were highlighted as having the biggest impact on business.

PMI registered 21.6 points in April, down from 45.3 in March and the lowest reading since the survey began in June 2016. Points above 50 indicate good business environment while that below 50 indicate worsening situations.

Stanbic Bank head of global markets, Kenneth Kitungulu said company shutdowns amid the COVID-19 lockdown led to a drop in output during April with most respondents uncertain of when things can start moving again. Ugandans still have to stay home until at least May 20, 2020, when further easing is expected to happen.

He added that “negative business sentiment is not necessarily a surprise given the restricted movement during the past 45-days of the lockdown”. Restrictions on travel meant that those companies that did order inputs during April faced lengthening delivery times.

Overall input costs decreased for the first time in the survey’s history with both purchase prices and staff costs down partly because many companies are laying off workers to keep costs down. Other firms have cut staff pay to save some cash.

“Companies were pessimistic regarding the outlook for business activity for the first time in April. A number of respondents expressed concerns around the lasting impacts of COVID-19 on the economy,” the report said.

Bank of Uganda has indicated it will take up to 2022 for the business environment to return to pre-covid-19 climate.

The PMI is done by market research company IHS Markit funded by Stanbic bank Uganda.

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