We need measures to cushion economy

Friday April 3 2020

This pictured taken on March 26, 2020 shows

This pictured taken on March 26, 2020 shows locked arcaded in Kampala city following a lockdown in a bid to prevent the spread of coronavirus. PHOTO BY ALEX ESAGALA  

By Editor

Only one and half million Ugandans stand to benefit from government’s relief aid following the national lockdown over coronavirus. Early this week, while issuing directives to contain the spread of coronavirus, President Museveni said government would distribute food and other relief items to vulnerable people as a result of the lockdown.

As government prepares to distribute relief items to the vulnerable members of our society, it is imperative that it is seen to be transparent. Failure to be transparent may result in serious misuse of resources intended to help the vulnerable population.
But what happens to the rest of the population that is likely to slip into poverty after losing jobs?

Currently, it isn’t a secret that the Covid-19 pandemic will have a significant impact on livelihoods and Uganda’s economy at large.
Majority of people in this economy live hand to mouth. Without a steady flow of income, many are likely to go hungry.
According to Economist Fred Muhumuza, at least 43 per cent (18m) of Ugandans are vulnerable and due to the lock-down, it means most of them (15-17 million people) will easily slip back into poverty.
As government looks out for to the vulnerable people now, what will happen to the rest who were not poor but are getting poorer by the day?

The other question is around cushioning the private sector that is experiencing serious cash flow problems. The past few days have been characterised by empty malls, closed shops and banks among others in a bid to limit the spread of coronavirus.
The economic impact of this pandemic is already being felt across key sectors of the economy in terms of job losses, declining exports and low economic activity.
As a result of reduced cash flows, several businesses are struggling to pay their employees while meeting other financial obligations such as paying taxes. The ripple effect is that there will be shortage of domestic revenue.

Amid all the efforts to fight Covid-19, we need to put more efforts in food security as most households are now food insecure. The lockdown, for instance, has pushed some people into starvation as they limit their food intake in these uncertain times.
As the impact of the coronavirus bites, some tax cuts would be welcome. Pay As You Earn should be waived for at least six months and Value Added Tax should also be dropped to boost consumer spending. Government therefore needs to establish measures that will cushion the economy from the shocks of the coronavirus.