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7 million Ugandans require economic bail out to stem COVID 19 effects

By Michael Kanaabi

Added 30th March 2020 11:16 AM

The largest group that will be impacted by the pandemic is the informal sector workers whom the statement puts at 4 million in total based on the projections from the 2014 census plus annual growth.

7 million Ugandans require economic bail out to stem COVID 19 effects

Patrick Katabazi the Executive Director of The Centre For Budget and Tax Policy

The largest group that will be impacted by the pandemic is the informal sector workers whom the statement puts at 4 million in total based on the projections from the 2014 census plus annual growth.

About 7 million Ugandans require social protection intervention to ensure they don't starve and can stay afloat as the economy of the country comes to its knees thanks to the partial lockdown, social distancing and public transport stoppage ordered by the President recently to stop the spread of the deadly COVID  19 disease according to experts.

In a statement released by the Centre For Budget and Tax Policy's Executive Director Patrick Katabazi, it is noted that some of the groups that will be gravely affected by the President's directives include the elderly, workers in the informal sector, private sector employees and low-level civil servants too.

The largest group that will be impacted by the pandemic is the informal sector workers whom the statement puts at 4 million in total based on the projections from the 2014 census plus annual growth.

This is followed by the elderly who based on a lowered age of consideration, about 60 years and covering all rural and urban centres total to about 2 million people the statement notes.

These are followed by the private sector employees who number about 800,000 in total plus the last group which is low cadre civil servants including security servicemen, women, teachers and nurses this lot totaling to 150,000.   

Required Interventions

The main proposed intervention to curtail the effects of the pandemic from getting out of hand on the economy and income of the country's citizens are based on a cash injection into the economy totaling close to sh 1.5 trillion the experts advised.

The informal sector which is a key stakeholder and employer in the local economy with up to 4 million members earning a livelihood from here through public transport, markets, and informal trade requires sh.800b in bailouts according to the report disbursed to these involved over a 4 months' period.

Chosen criteria for disbursement should be through their driver's associations for taxis, boda boda associations for the motorbikes, market associations for the vendors and KACITA among others for the traders in order for proper verification to be done.

Disbursements to the elderly according to this statement which have been already on going with a budget of over sh142 billion a year need to be topped up with an additional 257.5 billion for the coming months as the recipients increase from 200,000 to 2 million people because of the greater geographical reach and also lowered age limit.

Sh240 b is also required to give a subsistence wage of sh100,000 to 800,000 employees in the private sector who are at risk of redundancy and completely being laid off from their jobs as the economy grinds to a halt because of the COVID 19 pandemic. This intervention according to the experts view should be piloted for 3 months.  

With SMES being a key employer in the economy, the proposed interventions include up to 150b geared towards making SMES stay afloat in these tough and uncertain economic times. This according to proposal by the experts should be done through the Uganda Development Bank and given as soft loans to help the struggling companies stabilise.

However preference should be given to tax complaint companies and those remitting monthly contributions to NSSF so as to encourage many of the businesses still operating informally in the local economy to formalize.

The other group that requires special intervention according to the Centre's statement is the low cadre civil servants who are teachers, nurses plus men and women in the security forces earning less than sh500,000 a month.

This group should be provided an extra sh100,000 shillings a month to help them through this period. They are 150,000 in number and will require sh. 45 billion over 3 months.

Financing these interventions 

There is a credit facility for poor countries to the tune of US $ 10 billion with the International Monetary Fund which Uganda can benefit from that is interest-free and comes with a grace period of 5 and a half years before payments commence maturing much later after 10 years, the statement points out.

Savings from non-essential government activities like buying consumables, workshops, travel abroad and other non-core activities that can be put on hold should be diverted to fund the critical areas pointed out above.  

Also endeavoring to clear more of the local debt which stood at over 3.3 trillion at the end of the 2018-2019 financial year according to the Auditor General's report mainly owed to suppliers and local businesses will go a long way in stimulating the economy and dealing with the effects of a slowdown.

Renegotiating interest and debt payments, debt restructuring to avail more funds for social service expenditure will also mitigate the effects of the pandemic according to the experts as part of the sh. 2.3 trillion spent on interest payments annually will be diverted to essential social services.   

 

Other mitigations

The Centre's statement also recommended a law be put in place to curtail price increases by traders in this period with penalties, a proper social protection system starting with data collection that has contacts and account details of citizens plus modes of  intervention also be put in place.

Prompt payment of pension arrears  for civil servants, waivers and deductions on rent for tenants whose premises of operation are currently locked to control the spread of Covid 19 and setting up a joint civil society, private sector and government task force to help kick start the economy after the pandemic are some of the other recommendations.     

 

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