How Ugandan SMEs can survive during the COVID-19 pandemic

By Enoth Mbeine

When His Excellency the President of Uganda addressed the nation on 18th March, 2020 giving directives on how to mitigate an imminent COVID-19 outbreak in the country, life for small businesses changed instantly! The grim reality begun sinking in! It was no longer going to be business as usual for the small businesses.

Also last week, the minister of Finance, Planning and Economic Development, Hon. Matia Kasaija, in his address to parliament, mentioned that the government had decided to revise downwards the country's economic growth rate for FY 2019/20 from 6% to 5.2-5.7% because of the anticipated COVID-19 economic ramifications, pointing out that the services sector will be the most greatly hit.

For a small business, daily cash flow is the lifeblood. The owners, in trying to weather the pandemic, will face a financial blow and it is likely to worsen as forecast from many public health experts don't expect the outbreak to subside for at least eight weeks or more, thus assuming that the social distancing and other mitigation efforts can slow the spread (flattening the curve as we are increasing hearing!).

The small businesses, sometimes referred to as Micro, Small & Medium Enterprises (MSMEs) or Small & Medium Enterprises (SMEs) are by far the engine of growth for Uganda in terms of economic development, innovation and wealth creation. These Small businesses are spread all over the various sectors i.e. Services (50%), Commerce and Trade (33%), Manufacturing (10%) and others (7%). There are over 2.5Million Ugandans (Source: UIA 2018) employed in the sector and this accounts for over 20% of the country's GDP.

As the government ponders on which appropriate fiscal and monetary policy adjustments to help mitigate the anticipated shock effects of the COVID-19, I will attempt to highlight some tips on how the SMEs can weather through the COVID-19 "tsunami".

If the small business is renting or servicing a loan, this would be the ideal time to renegotiate the terms of the tenancy contract and also terms for the debt. You could, for example, ask your landlord for more time to pay their rent. For the bank loans, you could engage the banks in some discussions to temporarily defer interest payments on the outstanding debt.

Depending on the type of business, this period would be an ideal time to establish a remote work option. Here, you can implement a remote work policy where you encourage use of email, skype, video calls, and some social media platforms i.e. Facebook, LinkedIn, WhatsApp etc. so that your employees can stay in touch and keep working even if they aren't in the same place.

It is also important at this time that small business owners or managers step up their communication. Here, one should communicate twice as much as before to their customers, suppliers, staff, market prospects and other stakeholders. There is currently no one who is not facing the brunt of the crisis, so it is imperative that you are honest

and transparent about what your business is going through. Your clients will tend to empathize with you, as long as you communicate with them properly.

With the new slogan of "Social Distancing" buzzling around, it is advisable that as a business, you shift your sale/marketing strategy to an online one. Offer your services and products using online channels. An example would be online deliveries of food supplies. etc. Already some businesses around Kampala have quickly adapted this approach as we are seeing on social media.

Small business owners or managers, this is the time to stay and be positive like never before! Especially if you are the boss, you need to portray a positive attitude at all times for your staff to have morale and feel energized. Remember ups and downs are part of the business lifecycle. A demoralized business manager will send negative energy all around the business!

This is also the time to critically focus on your existing customers for repeat business. Call them up. Follow them up and update them on any new products or innovations you have come up with.

As they always say, desperate times call for desperate measures. If you're considering laying off some of your staff as one of the desperate measures to stay afloat, it is advisable that you discuss the first option of salary cuts with the staff you intend to lay off. If you are left with no choice but to lay off, do it with compassion!! Where possible, offer extra compensation!

Last but not least, the COVID-19 virus is definitely going to change how we live, how we shop, how we travel and how we work for at least a year! So as small business owners or managers, you need to plan for the long term. Although China and other economies are already starting to slowly recover, the spread of the Coronavirus is still extending all over the world, creating a ripple effect that will continue to impact us even here in Uganda for quite some time.

It surely might take a while for your small business to get back to business as usual, but resilience and perseverance will be key critical success factors to sail through this storm.

The very best of luck to your business!!

Authored , Lecturer of Entrepreneurship at The International University of East Africa & External Business Consultant with Skills Development Facility/Private Sector Foundation Uganda/World Bank Project