Rescue packages not working – SMES

Kampala, Uganda |  THE INDEPENDENT | The rescue package that was announced by governments around the world to help Small Scale Enterprises-SMEs to recover from the effects of the global COVID-19 pandemic is yet to have a tangible impact on the sector.  The pandemic compelled governments to shut down their economies to control the spread of the virus.  

To-date, some of the sectors like bars, schools and entertainment have remained under lock down, while some businesses are increasingly going digital to salvage their operations without violating COVID-19 containment measures put in place by the governments. 

These are some of the industries that require people to crowd in one place like in sports, music concerts, church and schools. While some are operating digitally or at reduced capacity in line with the Standard Operating Procedures, they will take long to meet their business levels recorded before the outbreak.

The measures that remain on some industries are equally affecting other industries that are connecting and thereby affecting economies. Some of these include suppliers of food and scholastic material whose business activities have remained suppressed because they have nowhere to sell. 

Despite government launching a number of rescue measures for the sectors deemed to be most affected, some of them are have little or no impact at all due to factors like lack of market. Tourism was one of the most affected sectors and it was expected that the reopening of the borders including Entebbe Airport would help the operators recover quickly but these say the business depends on incoming tourists. 

Many countries are still maintaining strict controls on international travel and many of these are major sources of tourists for Uganda. Processors of food are also still operating below capacity as schools and religious institutions, which are the major markets, remain closed leaving only supermarkets. 

Priscilla Ojambo, a tour operator and Director Triple Tee Adventures, Edna Karamagi, a dairy food processor and Barbara Bitimpa, a designer talk about their struggling businesses. They call on government to re-design its rescue programs to suit small enterprises. 

The government says that most of the rescue packages that were introduced before and after the 2020/2021 national budget were rushed as an emergency to mitigate the immediate effects of the outbreak on the economy.   

The government intended to strengthen existing private sector-driven programs like Operation Wealth Creation, the Agriculture Credit Facility and the Women Entrepreneurship Fund among others. Later, it came up with the presidential initiative dubbed Emyooga, which is channeled through community based groups with the aim of reaching low-income earners.   

The Assistant Commissioner for Regional Trade in the Ministry of Trade, Industry and Cooperatives, Richard Okot Okello says they have since done a survey as a ministry and discovered a need to reorganizes public spending with the aim of helping the private sector. He says that fortunately, part of their findings can be implemented through the National Development Plan III.      

Some lenders on their part say, some enterprises failed to utilize the limited opportunities available including going to reschedule their loans as provided by the lending institution.  Commercial Banks were asked by the central bank to reschedule loans for borrowers in distress so that they can be allowed to pay later. 

Microfinance institutions were also encouraged to discuss with their clients about possible rescheduling. 

However, the Information Manager at the Association of Microfinance Institutions of Uganda, Robert Ntalaka says when the economy went in lockdown and businesses started failing, some borrowers decided to disappear instead of seeking help.    

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