Even with a significant drop from the 6 per cent projection to only 3.1 per cent in June, latest figures from Bank of Uganda (BoU) show a pickup in economic activities amid the gloom of Covid-19 pandemic.
Quoting latest BoU statistics, Mr Moses Kabanda, a technocrat in the Ministry of Finance, who represented the Secretary to Treasury, Mr Keith Muhakanazi, told a high-level policy dialogue yesterday that there is evidence that the economy is on the road to recovery.
“Recent data on the high frequency indicators used to gauge the health of the economy shows improvements in the pace of economic activities, with now more Ugandans back to work and engaging in productive activities. Gross domestic product is expected to accelerate to 4.5 per cent this year,” he said.
Mr Kabanda was speaking at a dialogue organised by Civil Society Budget Advocacy Group (CSBAG) and Advocates Coalition for Development and Environment (ACODE).
Mr Kabanda said the increase in economic activities is attributed to the stimulus package intervention and the easing of lockdown measures by government in May, which saw some of the sectors reopen.
Evidence from BoU also shows that the volumes of imports and exports, despite plummeting in the first quarter of 2020, started bouncing back in June.
For instance, exports grew to $419.6m (about Shs1.5 trillion) in July from $207.1m (Shs763.8 billion) in April. Imports equally increased to $605m (about Shs2.2 trillion) in July from $334.3m (about Shs1.2 trillion) in April.
As a result of the pandemic, Mr Kabanda and experts, however, told the dialogue in Kampala yesterday that the recovery is expected to be gradual and uneven across sectors.
Dr Fred Muhumuza, an economist, argued that the government opened for the economy but not the economy.
Citing open but empty churches and malls, Mr Muhumuza said there is a need for government to create demand for the products that are being produced by local industries struggling to implement import substitution.
Government at the end of the last financial year unveiled a stimulus package, along with measures aimed at resuscitating an economy that was hard hit by Covid-19.
Among the measures was recapitalising Uganda Development Bank (UDB) with more than Shs1 trillion to be borrowed by businesses, Shs94b provided through the Micro Finance Support Centre for informal and micro businesses and tax relief measures, among others.
However, there has been criticism from the private sector, especially small and medium enterprises (SMEs), on delays in implementation of the stimulus as well as stringent terms set for the credit.
“Loan requirements issued by the Uganda Development Bank are deviating from the envisioned role of revitalising businesses through the stimulus package.
There are about 13 requirements set by government,” Mr John Walugembe, the Federation of Small and Medium Enterprises (SME) executive director, said.
Ms Jean Byamugisha, the executive director of Uganda Hotel Owners Association, said while they appreciate the move to reopen the airport, they need further interventions to realise recovery.
“There is a lot of marketing that needs to be done for us to be able to compete with what our neighbours are doing.
We have not got money from UDB because there are still a lot of processes that need to be put in place. This is one of the problems; it has taken a bit of time for it to be actualised,” she revealed.
Dr Arthur Bainomugisha, the executive director of ACODE, highlighted the need for robust communication to the public about the stimulus package, how to access it and targeted sectors needed to spur economic growth and job creation.
The reopening of the economy dialogue, whose outputs included two policy memos on reopening the education and tourism sectors, came to the conclusion that government should support the private sector through the Covid-19 storm.
Ms Byamugisha explained that there is a need for tax relief in form of a tax holiday as the hotel industry does not envisage recovery until late 2021 or 2022.
In addition, there is a need for increased awareness to ensure adherence to standards of operation by the public while visiting hotels.
Mr Julius Mukunda, the executive director of CSBAG, explained that there is a need to ascertain whether the country is borrowing to revamp the economy and speed up job creation or for consumption purposes. “We must borrow to produce. That is very critical and important,” Mr Mukunda said.