Uncertainty around government stimulus worries SMEs

Monday June 1 2020

Uncertain. A woman sells clothes in downtown

Uncertain. A woman sells clothes in downtown Kampala before lockdown. Photo by Alex Esagala.  

By Christine Kasemiire

Small and Medium Enterprises (SMEs) have called for a clear plan on how government intends to reinvigorate the economy through the proposed stimulus package.

For about two months, government has spoken of a stimulus package intended to revitalize businesses however, no details about the same has been provided.

Speaking during the launch of the Go digital campaign organised by Federation of Small and Medium Enterprises (FSME), Mr John Walugembe, the FSME executive director, called for a clear direction on how and when the stimulus package is expected.

“What we need more clearly is a timeline to say, we would like to work with you to have the stimulus package passed by August and then we can work backwards,” he said, acknowledging that government has shown intentions of setting up the stimulus package.

Mr Walugembe also said a host of business associations such as FSME, Uganda Manufacturers Association and Uganda Women Entrepreneurs Association Limited, among others, have asked to submit proposals of how they envision the stimulus package should be undertaken.

He said the stimulus package could be placed at about 5 or 10 per cent of the country’s gross domestic product (GDP) and government should clear at least 45 per cent of domestic arrears to revitalize the economy.


Mr Walugembe also noted that procurement processes during the lockdown period have not been favourable to SMEs, noting procurement systems must be decentralized to enable wider participation, especially SMEs.

Finance Minister Matia Kasaija through his social media account last week said he would present the stimulus package to Parliament, but failed to mention when that would happen.

What regional counterparts are doing
Uganda lags behind its regional counterparts such as Kenya which announced a second stimulus package worth Khs54b (Shs1.9 trillion) targeting agriculture, manufacturing and tourism among others.

This presents a big challenge to Ugandan businesses which compete regionally through the East African Community.

Covid-19 has had a negative impact on businesses as mitigation measures of the lockdown have hindered movement of personnel, goods and services due to reduced demand.

This has forced some companies to lay off and sack employees leading to increased unemployment in the country.

There is also increased worry that the revenue authority will fall far below its collection targets amid a heightened budget for the next financial year.