Dr Albert Richards Otete
In March 2020, the President of Uganda announced a string of measures to slowdown the spread of the Covid-19 virus and the resultant effect was that places of learning, worship and recreation were closed for several days.
The country was on lockdown and citizens were directed to work from home and practice social distancing, among other recommendations. Borders were also closed and public means of transport and sale of non-food items in markets was banned for weeks. Several other countries worldwide have implemented similar measures to slowdown the pandemic whose positive infections are running towards the one-million-mark.
The consequences of COVID-19 are leading to another disease, the “Poverty Disease” (“Povid-20”) as economic livelihood of citizens has come under threat. They may be surviving for now but from April 2020 onwards, the after effects of lockdown will start to bite very hard. Already, we have seen some football clubs in Europe asking their players to accept pay-cut. A number of organizations in Uganda are worried about paying salaries, yet there is little or no revenue coming in.
Imagine a bar having to pay salaries yet the Government ordered them to stay closed. Some employees have letter of appointment with a fixed salary per month, plus some benefits. They must be paid at end of the month. Some are unable to work from home, for example, boda-boda rider cannot work from home. A worker at a construction site cannot work from home. A teacher cannot work from home. There are millions of people in this category.
Population below the poverty line stood at approximately 21% while unemployment was almost 10%. Uganda population estimate is 44million for 2020. The poverty line is at about UGX 8,000 per day (USD2 per day). Anyone earning less than this amount per day will be below the poverty line. The exact number of boda-boda in Uganda is not known due to lack of proper register. It is estimated that there are 500,000 and each rider aims to earn at least UGX 10,000 per day to survive hand-to-mouth.
During a 2-week lockdown of boda-boda, the loss of income would be 500,000 x 10,000 x 14 = UGX 70,000,000,000 (a whopping Uganda shillings seventy billion). Remember that these people support their families and relatives using the same income. Their daily earnings also relieve others of a burden to look after them. There is a multiplier effect of employment; likewise, there is a multiplier effect of unemployment.
Even after the lockdown is lifted, some of these people who earn daily income cannot recoup lost incomes, so by end of the year some of them will have fallen below the poverty line. Wealth will deteriorate as soon from equity market meltdown. Unemployment will increase. Some very few people may gain from the pandemic.
It is obvious that many pockets and bank accounts will run dry soon arising from increased costs during quarantine and lockdown. A number of citizens and organizations may need bailout of different types and proportions in the aftermath of Covid-19.
Even those white-collar employees attempting to work at home cannot attain the high levels of productivity achieved in an office environment. The usual salary increments and bonuses may be at risk for 2020. Therefore, every household, organization and Government should implement measures to slowdown the “Povid-20”.
Help from other countries may not be forthcoming as the bitter storms are worldwide.
The writer is an investment advisor with Citadel Capital