Economist call for support for small businesses

BUSINESS | MSMEs

Economic experts have called for evidence based research to support the design of interventions for the micro, small and medium size enterprises that can sustain them post COVID-19 pandemic.

The economists have expressed fears that bigger enterprises might benefit from current government support at the expense of the micro and small enterprises if support measures are not inclusive for little enterprises.

Dr Sarah Ssewanyana, executive director at the Economic Policy Research Centre said the Uganda National Bureau of Statistics has not collected much information on micro, small and medium size enterprises (MSMEs).

This was during the launch of a study on the socio-economic impacts of COVID-19 on MSMEs in Uganda.

The study is being conducted by the EPRC and the Canada based International Development Research Centre (IDRC).

Ssewanyana said they want to support and reach firms at the lower levels.

"We want to visit MSMEs for three years, during and after the pandemic and see how COVID-19 will impact them," Ssewanyana said.

The minister of trade, industry and cooperatives Amelia Kyambadde launched the three-year study.

In a speech read for her by Dr Joshua Ntambi, commissioner MSMEs, Kyambadde said during the pandemic some jobs have been lost, liquidity dried up, some businesses closed.

"MSMEs have endured the economic slowdown brought about by the pandemic. There is need for evidence on the impact and need for advise on policy measures and stories of resilience from MSMEs during the hard times," Kyambadde said.

Dr Paul Okwi, senior programme specialist International Development Research Centre (IDRC) said the evidence to support MSMEs has to be strong, politically neutral, actionable and easy to understand.

"The policies have to be designed with the involvement of communities, government structures have to function to ensure the uptake of the evidence," Okwi said.

"Having evidence does not ensure policies are implemented; we need to put into place deliberate interventions to put policies into actions. We need evidence before interventions are made and the impact assessments of the interventions," Okwi noted.

Dr Francis Abibi, chief economist at the Uganda Development Bank said this is a time development finance institutions have to play a big role to revive the economy.

Abibi said many lessons have been learned following the pandemic such as producing products locally.

"Suppose the borders were closed and we had no salt, no sugar and no medicines. If we can industrialise we can get gainful employment, earn foreign exchange, and provide linkages to other sectors," Abibi said.

Gideon Badagawa, executive director Private Sector Foundation Uganda asked policy makers to wake up to the challenges that COVID-19 is bringing. 

"90% of MSMEs are in the informal sector, they need funds, skills, markets, and they need to meet volumes of goods and standards of products," Badagawa said.

"How do we prepare MSMEs for markets given that there are other competitors with products from China, South Africa. MSMEs have internal challenges that need to be dealt with," he said.

Richard Jabo, principal economist at the ministry of finance, planning and economic development said the economic recovery response unit at the ministry had done some studies which guided government actions.

"The work of the unit was to look at proposals from different players and came up with different proposals to the budget which included tax reliefs and differing paying taxes," Jabo said.

Dr Lawrence Bategeka, vice chairperson Parliament's committee on Finance said macroeconomic policies should shift focus to employment generation not only on controlling inflation and macroeconomic stabilisation.

Bategeka said government policies should focus now on interventions that will increase employment.