Prime
Companies to scale down not close shop
Evelyn Anite
What you need to know:
- In the financial sector, working with the Bank of Uganda, are plans for a further revision of the operating environment for banks will ensure that lending to small and large businesses is uninterrupted
I would like to correct the impression that may have been created by the story, “4,200 companies close over Covid-19 lockdown” published by your newspaper. It is unclear where/how this figure was arrived at and also undermines the spirit of cooperation that the government has with investors and the general public in confronting the economic effects of the Covid-19 pandemic.
Just like our health responses, led by President Museveni and health teams and courageous frontline workers, is meeting with considerable success against this global pandemic, we expect – once fully implemented – our economic interventions shall likewise forestall the effects of an anticipated worldwide recession.
It is true the Covid-19 pandemic has disrupted operations of many companies and threaten their profitability. Many sectors are badly exposed. That said, no members of the Uganda Manufacturers Association have said they are closing shop. Many do report that cash flows are tight and that they need to go into hibernation. The government has also received 20 written requests for tax deferrals from hotels and schools. Another five companies have indicated to the Uganda Investment Authority that they will scale down operations due to Covid-19.
The government intends to retain our businesses, create new ones and expand opportunities for Ugandan workers and consumers. As you may recall at the start of the Covid-19 crisis when I reached out to our industry partners to help – we had only two companies making hand sanitisers. The number today is 15. Other companies are remodelling their businesses. Southern Range now makes masks and Nice House of Plastics has been producing packaging for sanitiser. We are also encouraged, heeding the President’s call, that many traders are re-registering their businesses to transition into manufacturing and new investors, such as the two salt companies, are taking advantage of import-substitution to plug the hole left by inability to import. This is evidence of how versatile Ugandan investors can be and how engagement and encouragement can lead to positive outcomes.
I want to assure the general public but also our partners and investors that the government has a comprehensive and considered response that includes the biggest single stimulus in Uganda’s history. These measures demonstrate our commitment to keep the economy on a growth path and address the specific needs of affected sectors within the economy. Down the line they will lead to a robust economic recovery because together they pursue positive strategy of import-substitution that creates jobs, reinforces our resilience and better prepares us to deal with future external shocks. Therefore, now is not the time to despair.
Support of over $150 million (Shs567b) to the Uganda Development Bank for onward lending to Small and Medium Sized businesses and enterprises is unprecedented but has been a key promise of the President to support local business with the capital it needs. But that is not all.
While it has not been concluded, internally the Ministry of Finance and its state and non-state partners, are involved in a robust conversation about other measures, monetary, fiscal and administrative, to support job retentions and creation. These include listening to enterprises looking for deferrals of their tax obligations, waivers on arrears and even PAYE deferrals in some sectors. The President is also supportive of strategic investment by the Uganda Development Corporation in some key industries as guided by import-substitution and value addition.
In the financial sector, working with the Bank of Uganda, are plans for a further revision of the operating environment for banks will ensure that lending to small and large businesses is uninterrupted.
These undertakings demonstrate our commitment to turn things around despite the pressures of Covid-19. We are operating in unchartered waters however and must respond with agility to fast changing circumstances. However, we can only accomplish our tasks with confidence while acknowledging that current realities are not permanent, nor should they define our vision of the future.
