Small businesses worry about COVID-19 backlash

March 19, 2020 in Business, Trade & Industry by Editor

Walugembe said small business owners are worried some of the new measures will diminish consumer confidence and hurt earnings.

Owners of small enterprises are worried the recently announced restrictions on public gatherings and other measures to combat the coronavirus in Uganda will push them out of business. After agriculture, SMEs are the biggest employers in Uganda.

Federation for Small and Medium Enterprises Uganda (FSME) executive director, John Walugembe said on Wednesday morning, “Our recommendation is that while the President may take such precautions, the implementer must put in consideration the fact that most Ugandans live from hand to mouth, if they are stopped from working, their families will have no way of surviving and may end up starving before coronavirus reaches here. Our recommendation is that they allow businesses to take precautions like putting hand washing materials at their premises and increases use of sanitizers.”

Although Uganda has not reported a case of COVID-19 to date, on Wednesday evening President Yoweri Museveni directed a 32-day closure of all educational institutions, suspension of organised religious services, and restrictions of weddings and burials.

Live entertainment, nightclubs and bars have also been targeted with a series of new rules intended to limit the spread of the disease in Uganda.

Museveni told Ugandans, “When it comes to health, it is better to be a coward and be on the side of caution. If there is no danger after one month, that will be good. If there was danger, we would have avoided it.”

Speaking earlier at a news conference held at the FSME offices in Kampala, Walugembe accepted the government must take all the necessary precautions to but should also be mindful that it does not create a state of fear and despondency that will diminish consumer confidence.

The Federation requested the government to boast the liquidity of small businesses by putting in place an emergency low-interest fund from which small businesses can borrow and meet their working capital and operational requirements.

“The central bank should slash interest rates to spur lending to the private sector. Government can also offer tax reliefs to businesses by lowering the VAT rates for about six months. We are not saying that Government should give handouts to businesses, but create an environment that allows businesses to survive the crisis until things get back to normal,” Walugembe said.