How has the COVID-19 Pandemic Impacted Ugandan Businesses? Results from a Business Climate Survey

The Corona Virus Disease-2019 (COVID-19) has continued to spread across the world leaving death and economic devastation in its wake. Although the number of confirmed cases in Uganda remain very low in comparison to other countries, the containment adopted to curb the spread of the virus have affected business operations. This report, based on a survey of firms using the Economic Policy Research Centre (EPRC)’s business climate index (BCI) methodology, examines the effect of the risk presented by COVID-19 pandemic on Uganda’s businesses. The results indicate that small and medium businesses have experienced the largest effects of the risk associated with COVID-19 compared to large scale businesses. The decline in small and medium businesses is due to inability to cope containment measures instituted by government. Specifically, nine out of ten businesses report experiencing an increase in operating expenses due to preventive measures instituted by government to curb the spread of the virus. Agriculture enterprises have been worst hit due to challenges of accessing inputs arising from transport restrictions and the ban on weekly markets. In addition, prices of agricultural outputs have declined due to lost demand and the shift from consumption of fresh agricultural produce to dry rations. With respect to the future outlook, the major concerns highlighted by businesses—in the event that the COVID-19 situation persists for more than six months—relate to reduced product demand and potential inability to meet costs of operations. In particular, majority of micro and small businesses indicate that they would exit business in 1 to 3 months in the event the current situation persist. On the other hand, majority of the medium and large firms do not foresee closure. Furthermore, there is a slightly higher resilience among agriculture and manufacturing firms compared to service sector firms. Finally, the report projects that in the event that COVID-19 persists for the next six month, about 3.8 million workers would lose their jobs temporarily while 0.6 million would lose their employment permanently. Over 75 percent of employees projected to lose their jobs permanently are from the service sector and mainly from Kampala.