What you need to know:
- In the New Year, some of the chief executive officers (CEOs) who talked to Daily Monitor, expect a meagre or mixed performance from the economy on account of contracted growth and subdued government spending.
- With every nerve of the economy affected by the pandemic in one way or another, the war against the virus is not yet won. The deaths continue as well as infections.
As Uganda welcomes the New Year today, economic conditions in the country like elsewhere in the world, remain bleak.
The pandemic has brought the economy to its knees due to a combination of global supply chain disruptions and sudden decline in demand. This is in contrast to the optimism that prevailed before the crisis.
In the pandemic year, lockdowns became a matter of life or death as leaders struggled to save lives amid escalating number of infections and deaths.
In the New Year, some of the chief executive officers (CEOs) who talked to Daily Monitor, expect a meagre or mixed performance from the economy on account of contracted growth and subdued government spending.
With every nerve of the economy affected by the pandemic in one way or another, the war against the virus is not yet won. The deaths continue as well as infections.
The result of this, according to top CEOs in the country, has been economic recession, loss of jobs and increase in poverty levels.
Although there has been some recovery following the reopening of the economy, the CEOs and some economists are still concerned about the speed of recovery and foresee hardships continuing to bite Ugandans in the next two to three years, causing negative impact on human capital development and standard of living.
To mitigate the impact of Covid-19 and step up the much-needed economic growth, CEOs have proposed a three-pronged approach to the pandemic: test, treat and import vaccines for long-term protection of the citizens and the vestiges of the economy.
The CEOs say this will be archived through increased funding to health sector and extended credit relief and tax measures.
CEOs weigh in on 2020 losses and 2021 prospects
Mr Mumba Kalifungwa, managing director of Absa Bank Uganda Limited.
The year 2020 has been a challenging year for the economy and the banking sector. The challenging part was the quarter when there was a lockdown in the country which brought down economic activities.
However, the economy proved to be resilient from quarter three onwards following the lifting of the lockdown in the country and economic activities picked again amid challenges.
In terms of banking activities, the challenge has been managing the potential increase in Non-Performing Loans (NPL) because of the consequence of the Covid-19 pandemic that affected the clients businesses.
Our clients were so stressed, especially those in the hospitality and education, who have been hit hard.
Nationally, that is the challenge we have got to manage. Going forward there is hope of recovery in the economy since there is increased economic activities and the vaccines for the Covid-19.
Mr Fabian Kasi, managing director of Centenary Bank Limited
There has been a challenge of restriction that affected some banks and customers. As a result, there has been a slowdown in growth of bank activities and because of that, we have not achieved the growth rate we had expected. However, we expect to be better in 2021 following the recovery of the economy that is taking place which will rejuvenate private sector activities.
However, I would like to point out most is that people need to take care of themselves because the Covid-19 is still there.
Dr Ibrahim Kasirye, director research at Economic Policy Research Centre
The Covid-19 pandemic has negatively impacted on the economy in 2020 and the full recovery in the economy will be two to three years.
The outbreak of the pandemic forced a lockdown which affected economic activity and a large per centage of business/economic activities came to stand still.
The impact of the pandemic forced us (the country) to borrow more than was projected by the government and is expected to increase further.
Besides increased borrowing the pandemic has affected tourism and education sectors so much. We earn a lot of money from the tourism industry and regarding education, it is the largest employer but it has been greatly affected by the closure of schools.
The Covid-19 pandemic is going to affect the National Development Plan III through the budget.
I propose increased spending in the health sector to curtail the spread of infections in the country and cautious spending.
Mr Patrick Bitature, chairman Simba Group of Companies
I hope the majority of Ugandans like me have a sense of gratitude for having gone through this very challenging year 2020.
We must take a moment to reflect on the events behind us, but don’t allow them to hold us hostage. Let us learn to be stronger and wiser.
In 2021, as the dust settles after the political elections and sanity returns to all of us regardless of the outcome, Ugandans should refocus on short-term and long-term productivity and prosperity.
Although there were many frustrations, Uganda was among the best countries in the face of the global Covid-19 pandemic challenge with new businesses and many innovations in different areas such as health and information technology emerging to curb the pandemic and ensure continuity of access to services and businesses.
We must adapt to this new environment and flourish. We have always been a resilient people, having survived so much in the past.
The government should foster a culture of healing and reconciliation and put politicking aside.
2021 presents new opportunities and lots of promise for a disciplined hard working population.
Sudhir Ruparelia. Chairman Ruparelia Group of companies
The year 2020 has been a very tough year for all of us, especially the business community. Much as Uganda is not the only nation that suffered losses, we were hit badly.
I am sure that given the Covid-19 vaccines, nobody will lose a life in 2021. Covid-19 hit us badly in 2020 because many businesses were shut down and they operated in losses.
We thank government for credit relief and tax administration measures announced by Uganda Revenue Authority (URA) that eased some pain for the private sector.
Given the fact that many countries have come up with Covid-19 vaccines, we are hopeful that in 2021, the virus will be defeated and business will bloom again.
The business community is happy after the government sealed the oil deal. We must expedite oil exploration in 2021 because this is going to come with great opportunities for Ugandans.
We have entered a new year with the virus, so going forward, all Ugandans who want to prosper in business should make sure that they control their costs and aim high come 2021.
It is our prayer that the government, extends any of the credit relief and tax administration measures it had put in place at the peak of the pandemic into 2021 and possibly 2022, to aid quicker economic growth and save jobs for Ugandans.
Mr Charles Mbire, Chairman MTN Uganda
There was an unpredictable market and capital shock due to Covid-19 in 2020 and the New Year holds bigger challenges.
Next year you will see great challenges from the new business dynamics across the board.
Mr Gideon Badagawa, executive director of Private Sector Foundation Uganda
It has been a tough year. The private sector operated at a slow pace of 60 per cent, jobs have been lost, the economic growth for 2019/2020 was 2.9 per cent instead of 6.2 per cent that had been projected.
The government is not collecting enough taxes from the private sector because their businesses are not doing well and the government doesn’t have money to spend.
The banks are not lending much to the private sector so there is little investment in the country. The government is borrowing from the banks instead.
I propose a stimulus package for struggling businesses and tax breaks to support economic growth in 2021.
Mr Emmanuel Tumusiime Mutebile, Governor of the Bank of Uganda
The high frequency indicators of economic activity in the quarter to October 2020 indicate an annual growth rate of 3.3 per cent in contrast to the sharp contraction of six per cent in the quarter to June 2020.
Although the recovery in growth rate is promising, the recovery is proceeding at an uneven pace.
Social distancing measures continue to weigh heavily on certain activities of the services sector, particularly in hospitality and tourism, while other sectors are still feeling the lagged effects of the economic downturn.
Economic activity is expected to take longer to recover and resource utilisation to return to normal given the sharp contraction experienced in the quarter to June 2020.
The economic growth is, therefore, projected to remain below its potential until Financial Year 2023/2024. Proposes that the Central Bank Rate be left at seven per cent to support economic growth and recover.
Mr Douglas Opio, the executive director of the Federation of Uganda Employers
In the New Year, we need to strengthen the health system. Workers cannot concentrate and be productive when they and or their relatives are sick.
We are hopeful that by June, we shall have got the Covid-19 vaccine as government has promised and this will make things return to normal.
Government has promised that they are securing the vaccines by May, but the doses may not be enough for all Ugandans.
The government should revisit the plan for national health insurance to rescue Ugandans from heavy out of pocket spending on health care that is associated with increased poverty and denial of access to services for poor people.
We are hopeful that things will change next year and that the pandemic is presenting new business opportunities.
Government also promised a stimulus package to help companies revive the businesses but we have not yet got the money.
Mr Richard Byarugaba, managing Director of National Social Security Fund (NSSF)
In 2020, the challenge was Covid-19 and the resulting decline in economic activity which meant companies like ourselves lost contributions and the companies we invest in lost revenue and the disruptions in the economy, including the services industry; tourism, education.
The only service that remained afloat was manufacturing, especially for essential goods.
What government should do in 2021 is to see how they can help those sectors come back through tax breaks, holidays and reducing tax rates on personal income to allow people to consume more, especially during the pandemic.
While there was government relief aid in form of food, it was not directly targeted to the areas that really suffered. You would expect government to give out incentives to reduce the cost of doing business to sectors such as tourism and education.
Ms Allen Kagina, the executive director of Uganda National Roads Authority
The year 2020 was a difficult year on all fronts. The Covid-19 pandemic defined most of the year. The economy took a hit and we all learned to live under new restrictions. Life has certainly changed. But we have come to the end and do not want to dwell on all the negatives. As we cross into a new decade and a new year, I pray peace and favour on all Ugandans.
Mr Matia Kasaija, Finance Minister
There is strong evidence of the resilience of the country’s economy in the midst of the pandemic that has greatly ravaged other countries.
The plan to secure enough doses of the Covid-19 vaccine for Ugandans will be discussed at high levels in two days.
The stimulus was given in terms of tax exemption and restructuring of loans.
In 2021, I am going to focus on building infrastructure, getting the price of power down and now good roads are almost everywhere in Uganda.
In the manufacturing sector, we are doing very well, agriculture we have surplus production and that is why we are looking for foreign markets, excess sugar and more.
The economy is on its feet. The most important thing is to keep peace and fight the spread of Covid as people go into Presidential election on January 14.
Mr Paddy Miramira, chief executive officer Pepsi
Covid-19 has been the biggest challenge to the point that it not news anymore.
There was also digital tax stamps, which is a cost incurred by manufacturers yet it is government measure to get more revenue.
It is an operational cost, it should be borne by URA. It would be good if government can take that cost on going forward. There have been promises of reducing the cost of power. They did, but they can do better than where they stopped.
Of recent, there have been transport and logistical issues where goods spend about over 10 days where it used to only be four days.
Government should expedite the standard gauge railway to reduce on logistical costs.
The government also quietly increased excise duty on sodas from Shs200 per liter to Shs250, which is expected to have adverse effects because we are thinking of increasing prices.
Allan Mafabi, Chief Executive Officer Britam Insurance
Usually, we want to look at challenges because they have been in our faces, but this year is one of the most amazing years despite the challenges and loss of lives because we can now work from wherever we are and deliver perhaps even more for the company. 2020 is the year that has accelerated the speed of change. It was revolutionary. The moment all of us focus on the positives and many more wonderful things we can do going forward, it will be easier for the entire world. The new normal is quite exciting because we can deliver more from home while striking a balance with the family. As a company, I have decided to look at 2020 as one of our most amazing years.
By Tony Abet, Martin Luther Oketch & Christine Kasemii