KAMPALA — Small businesses have struggled since the the coronavirus lockdown began with many not being able to pay employees, and a recent survey warned that almost a fifth of SMEs could collapse for good.
Despite the government tax reliefs announced last year, as the country seeks to recover, city tycoon Mr. Sudhir Ruparelia the chairman of Ruparelia Group feels that it may not be enough.
In his New Year message , the businessman asked the government to extend business relief to to protect its citizens from the effects of coronavirus.
“It is my prayer that the government extends, into 2021 and possibly 2022, many of the credit relief and tax administration measures it had put in place at the peak of the first wave, to aid quicker economic recovery,” Sudhir said in a New Year statement.
Whereas the lockdown intended to reduce the spread of COVID-19, a deep recession is unavoidable due to multi-layered crisis comprising a health shock, domestic economic disruption, revenue shortfall, plummeting external demand, capital flow reversal, and a collapse in commodity prices.
For example, the effects are most keenly felt through disruption to key service sectors such as tourism and hotels, while manufacturing and trade activities are affected by disruptions to supply chains.
In the informal sector, workers are struggling to cope with the economic fallout caused by the spread of Covid-19.
An urban poor wonders where the next meal will come from while a private teacher struggles to pay rent.
Many other informal businesses were forced to close in the early days of the national lockdown, with curfew and a ban on both public and private transport in place.
Dr Sudhir says that observing the Covid-19 mitigation Standard Operating Procedures (SoPs) is essential for the reopening of the economy almost fully, saving jobs as well as raising the necessary tax revenue to keep many of the government programmes running.
In April 2020, at least 4200 companies across the country shut down as a result of Covid-19 lockdown after they failed to maintain the workers and other SoPs that were issued President Museveni and the Ministry of Health that required the factories to keep their staff on site if they were to continue operating during the lockdown.
According to the Ministry of trade statement, the country’s imports fell from $711.9m (about UGX2.7 trillion) in January 2020 to $593.7m (about UGX2.2 trillion) in March while exports reduced from $383.6m (UGX.1.4 trillion) in January to $352.9m (UGX.1.3 trillion) in February.
Dr Sudhir described the year 2020 as the most challenging for his company that was established more than 30 years ago saying that the company which is among the major employers was forced to shut down doors to thousands of its staff and customers which is one of the hardest things we had to do.
“As a group, we reached deep within ourselves for some innovations such as online learning across all our educational institutions, put in place extra health and safety standards at our buildings and hotels and adopted home working for some of the non-essential staff. Most importantly, we still kept thousands of jobs,” revealed Dr Sudhir while commending individuals and business entities, who responded to the president to raise more than UGX.17bn in cash and UGX.33bn in kind to aid government Covid-19 relief efforts.