The Plight of Micro Small and Medium Enterprises amidst COVID-19: A Post Lockdown Analysis Based on Business Climate Survey

The COVID-19 outbreak and the subsequent containment measures have had devastating effects on Uganda’s businesses resulting in the economy’s general slowdown. Despite the macro-level impacts, evidence at a micro-level, especially regarding the post lockdown period, generally remains anecdotal. More specifically, that relating to schools—the most prominent formal private-sector employer in Uganda and worst affected by the school closures—is lacking, notwithstanding the phased re-opening of schools that started in October 2020. In this special Business Climate Index Issue, we examine the pandemic’s impact on MSMEs and private schools in Uganda, considering the lockdown and post lockdown period and schools’ re-opening. Results indicate that the emergence of the COVID-19 pandemic and the subsequent measures to contain its spread negatively affected business operations in all sectors of the economy, albeit with different magnitude. After the lockdown, businesses faced severe liquidity constraints while re-opening. In this case, female owned businesses in the services sector reported a much dire financial situation. In addition, access to credit remains a challenge as financial institutions remain pessimistic about the future business environment. Nonetheless, employment in businesses showed signs of recovery, albeit sluggishly, with much slower employment recovery in the services sector. Regarding the education sector, the low turn-up of learners upon re-opening and delays in school fees payment has resulted in the contraction of revenues for private schools, leading to increased indebtedness and depletion of savings. Consequently, private schools have experienced challenges in accessing supplies due to the high cost while teachers have registered salary cuts. Notably, most schools were unable to implement online teaching as their learners lacked the required gadgets. Based on the findings, there is a need to provide emergence loans to businesses, including private schools, to lessen the financial constraints, paying particular attention to female-owned businesses. Schools can also be offered in-kind support−such as providing food items to offset the high cost of supplies. The government can also buy equity in some strategic but struggling private schools, which these schools can re-require as they recover.