Ugandans spending 30% less due to COVID-19

Among the most immediate effects of COVID-19 has been the radical changes to how people spend their money with Ugandans reporting that their households are now spending sh10,800 per day, down from sh14,100 in January of this year, a new study has found.

The study dubbed livelihoods under COVID-19 done by Twaweza and Food Rights Alliance indicates that the drop has been sharper in rural areas from sh14,600 to sh10,300 between January and May than sh13,100 to sh12,300 in urban areas.

This means that rural households were spending Sh1500 more than their urban counterparts before the COVID-19 outbreak but the researchers didn't explain the rationale.

However, according to Marie Nanyanzi, the program officer Sauti za Wananchi, the rural spending pattern from sh14,600 to sh10,300 means that the population was most economically affected by the pandemic but less supported by the government.

"More households find that their income does not meet their daily needs now compared to January which means 26% compared to 22% previously," the report reads in part.

The findings are based on data collected by Sauti za Wananchi at Twaweza from 2000 respondents using mobile phones across Uganda between January and May to June 2020. The study was launched online over the weekend.

Despite these increased pressures, when asked who they would turn to for help if there was not enough money, 3 out of 8 Ugandans said they would not ask for help, compared to 2 out of 8 who said the same in January.

"Among those willing to ask for help, fewer of them would ask friends and more would seek help from family members than it was early this year. Nonetheless, asking family and friends for money is among a range of previously less-used options that are becoming slightly more common during the COVID-19 pandemic. Others include selling assets and seeking casual work," Nanyanzi explained.

"People cannot turn to their neighbours or friends for help because they are equally struggling but also when someone is poor, they are less likely to have friends and that is why they run to families. It is even more worrying that COVID-19 is forcing people to sell assets like land; this means that when all this is done, they will not have the most basic factor of labour which will increase the inequality gap," she added.

The study shows that citizens are cutting expenditure from 37% in January to 26% in May/June but most interestingly getting fewer items on credit (22% to 19%) and borrowing less money (16% to 14%).

According to Agnes Kirabo the executive director, Food Rights Alliance, "naturally a poor person is less likely to borrow because they are aware, they will not be able to pay back but unfortunately, the government is borrowing heavily on behalf of these poor people."

She said that given the mounting financial pressure, Ugandans are in need of some additional support for both rural and urban dwellers.

Kirabo said, "Everyone expected the rural dwellers to be better off because they depend on their farms for daily feeding but they were equally vulnerable. The study shows that those with educated children were more likely to receive Government support than the poor who can't educate their children."

Overall, 1 out of 10 Ugandans have received support in the last two months from government, NGOs or any other actors but urban households have been three times more likely to receive support than rural homes, which is in line with the government's mitigation strategy for the economic effect of COVID-19.

In March the government announced a lockdown of the country to combat the spread of COVID-19 but food distribution for the vulnerable population concentrated in Kampala, Wakiso and Mukono only.

Nanyanzi said: "The intensifying pressure on citizens' ability to meet basic needs is clear. Important changes in people's spending and financial management are already apparent - from quiet belt-tightening to growing unwillingness to ask for help from our neighbours. The data also reveal that, contrary to expectation, rural households are facing even greater financial strain than their urban counterparts. Without thoughtful and assertive intervention, all Ugandans may face even harder times ahead."

"The data shows the gap in Uganda's food governance system; whereas household food security has been more resilient to shocks such as pandemics, national food security suffers under such shocks, weakening household food security further.  Enhancing national food resilience requires a holistic approach with a well-defined and significant role for the state," said Kirabo.