Makerere University Business School-MUBS Economics Lecturer and Policy Analyst, Ramathan Ggoobi says the Coronavirus (COVID-19), which has since been declared a pandemic is economically contagious and has attacked all sectors of the economy at all fronts.
Government needs to devise means of protecting
the economy from crumbling as a result of the temporary shutdown of key
businesses because of the corona virus.
Makerere University Business School-MUBS
Economics Lecturer and Policy Analyst, Ramathan Ggoobi says the Coronavirus
(COVID-19), which has since been declared a pandemic is economically contagious
and has attacked all sectors of the economy at all fronts.
It follows the drastic measures
announced by President, Yoweri Museveni on Wednesday this week to contain the
corona virus threat. The measures include among others the closure of all educational
institutions nationwide, a ban on public gatherings including congregational
prayers, sports, seminars, parties, funerals and bars.
The lock-down according to Ggoobi is a disaster
and is likely to cripple the flow of currency in a simple economy. He argues
that Uganda is currently facing a reduction in the supply of first moving goods
due to over reliance on China, India and Kenya, where 60 per cent of all goods
consumed in the country come from.
“You find that when someone drinks beer, the bar makes money.
That bar takes the money to the factory, which makes the beer. The factory is
able to pay its workers and then the workers go and buy other goods. The
factory also buys raw materials. There are factories using cassava while others
are using sorghum to produce this beer,” Ggoobi observes.
He says a reduction in the amount of beer consumed, will have a ripple effect on the entire supply chain.
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Ggoobi says the money spent in bars leads to
increased consumption of fuel, food and provides survival means for many
Ugandans who operate them.
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According to Ggoobi, there is a likelihood of
rising levels of inflation. He observes that the financial sector is being
disrupted as a result of the closure of businesses, majority of which run on
loans.
“These loans are likely to become nonperforming loans and
this is the number one cause of financial crisis. It is what actually fails
banks. God forbid, this shouldn’t happen to the banks today,” says Ggoobi.
He says Uganda acted in panic to close down businesses and
institutions learning from other developed countries. “We are responding to panic, not to a real problem. And when
you act under panic, you often over react and I think in this case there was a
bit of overreaction from the government,” he says.
Adding that; “thankfully, on the side of economy, they didn’t
over react because I have been listening to some people in government who were
proposing things that would have destroyed this small economy –controlling the
prices and so on. The good thing, the president didn’t talk about that.”
Ggoobi predicts worse for the economy if government doesn’t
put in place serious measures. He proposes that government introduces wage
subsidies for half pay to businesses that have closed, in order for them not to
lay off workers.
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He also proposes reduction of taxes on services such as
internet and mobile money to increase capacity to maintain businesses, need to
access credit by Small Scale Enterprises (SMEs) by government sharing risks.
Ggoobi has also advised Uganda Revenue Authority and National
Social Security Fund- NSSF to reduce their tax expectations at least in this
last quarter.
Tonny, a dealer in male garments operating Unik Traders in Nabugabo Plaza
says they have been getting supplies from China but haven’t placed any order
since the outbreak.
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Emmanuel Ahimbisibwe is a sales manager at Maria’s Cargo, a
shipping company that delivers goods on behalf of traders in Uganda from China,
India, Vietnam, Malaysia and Indonesia. He says business has gone
down ever since the virus broke out and movements restricted.
According to Ahimbisibwe, most of the airlines
that used to bring their cargo have closed. “We cannot say businesses are okay as I speak. Businesses are
down. Everyone is crying. And whatever is there in the market is costly so to
be honest with you, businesses are not doing well at all,” Ahimbisibwe told
URN.
He says they are currently delivering goods for traders who
had made and cleared orders from China before the COVID-19 outbreak.
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Runyankore
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Closing schools, churches and other institutions has
according to Ahimbisibwe set a major shock in demand of goods supplied by
businessmen in town. He says this lockdown will be more painful if it goes
beyond one month.
Davidson Ndyabahika
Freelancer