EPRC calls for redemption of micro, small and medium enterprises after Covid-19 blow

Kampala, Uganda | THE INDEPENDENT | Researchers at the Economic Policy Researcher Center (EPRC) have asked the government to redeem businesses that were completely shutdown due to pressures caused by COVID-19-related restrictions.

This followed a survey showing over 400,000 employees of Micro, Small and Medium-Scale Enterprises (MSMEs) lost their jobs over the two lockdowns that happened in 2020 and 2021.

Tonny Odokonyero, a research fellow at the centre told URN in an interview that they surveyed MSMEs that operate businesses in the education, leisure and hospitality sectors. The entities surveyed had a total of 1.03 million jobs by the end of 2019, but these had 425,000 employees less by April 2022, most of which were women and youth.

He explains that by the time they went to the field for the study in August 2020, some 7,000 businesses had already closed with 40 percent having completely stopped working while the other 20 per cent couldn’t be traced as both the business owners couldn’t be reached and premises closed.

Researchers warn that loss of these means loss of livelihood and the government needs to come up with ways of bringing them back to business even as many of these were operating informally. They say there is now enough data to help policymakers trace them.

According to the study, whose results were released on Thursday, half of the MSMEs that had complete business closure in the first lockdown fully recovered between July and December 2020. The recovery rate increased to 58  per cent between January and May 2021. The hardest-hit enterprises were in the tourism sector.

David Bahati, the State Minister for Trade said there’s money allocated to helping MSMEs survive but many don’t know how they can access it. He says 200 billion shillings has been invested in different banks to support small enterprises and are now working on the modalities to simplify the process for access.

For him, what pushed people out of business with the COVID-19-related shocks is the fact that they couldn’t quickly change their approach to what they do when the crisis hit. He recommends more skilling of operators of macro, medium and small scale enterprises.

But while Bahati says this, business owners attending the results dissemination meeting said even processes of formalizing businesses such that they can easily access finances are expensive, draining and difficult.

Joshua Mutambi, the Commissioner for MSMEs at the Ministry of Trade, Industry and Cooperatives who also chaired the survey steering committee says instead of pushing for stimulus packages, inter-linked businesses can choose to work together. He for instance says enterprises can access raw materials or other inputs and pay later if there was trust instead of conducting business on a cash basis all the time which has proven to be unsustainable in times of crisis.

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URN